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What are the two types of asset-price bubbles? Which type poses a bigger threat to the financial system? Why?
What is the lesson about the lack of information and the probability that a transaction will occur?
Why the debate was centered around financial system regulations. Do you think the Federal Reserve failed in its attempt to properly enforce current regulation?
Explain how real estate market conditions in these areas can explain almost 50% of bank failures in 2008.
Explain why you would not offer a loan to the next individual that applies for a car loan at your local bank at a higher interest rate than the bank pays?
Describe the effects on autonomous consumption and investment expenditure. Describe the effects on the cost of borrowing by issuing bonds.
Would you recommend expansionary fiscal policy based on tax cuts or increased government expenditures?
What would be the long run effect of distrust in the U.S. government's ability to finance its own deficit?
Should this be considered government consumption or government investment? Describe the effect of such expenditures on the government debt burden.
Even if the dependency ratio is constant, what would be the effect of such a trend on the size of the government debt?
What would be the effect on the measurement of the government deficit of considering Social Security taxes a forced loan to the government?
Explain the effect of such a scenario on the size of contributions for social insurance and the government deficit in the United States.
Suppose government purchases amount to $2.5 trillion, transfer payments amount to $1 trillion. Calculate the government deficit. Calculate the primary deficit.
What determines whether budget deficits will result in inflation in the long run? What objections to the Ricardian equivalence view have been raised?
What arguments should be considered in assessing the burden that government debt imposes on future generations?
Identify the four main categories of government spending and give an example of each. What are the government's four main revenue sources?
Which one do you think is the worst mistake: bursting a bubble when it was not necessary, or not bursting a bubble when it was needed?
Describe the effects on the economy if the Federal Reserve uses monetary policy to burst a wrongfully identified asset-price bubble.
Explain why low levels of interest rates might fuel inflation expectations and what the Federal Reserve should do to avoid the latter.
Why do you think the Federal Reserve acted according to its mandate, or that it wrongfully used its ability to support the financial system?
What would happen to revenue from seignorage if the inflation rate is very high?
What is the foreign exchange market? Describe the two types of transactions that take place in this market.
What are the short-run effects on aggregate output and the inflation rate when the domestic currency appreciates or depreciates?
Why do central banks intervene in foreign exchange markets? How do these interventions affect their international reserves and exchange rates?
What are the advantages and disadvantages of exchange-rate pegging? Calculate the real exchange rate between U.S. wine and French wine.