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In the diagram sketch a line representing a potential output of $10 trillion. Then illustrate how the gap would close in the long run.
Visit that site and use the links to determine what tax and spending proposals have been made in Congress during the past six months.
Also has a component that varies directly with the level of real GDP. How would this affect the size of the government purchase and net tax multipliers?
In the long run, what happens to the level of real GDP as a result of government intervention? What happens to the price level?
Discuss how could a tax cut achieve the same result? Would the tax cut have to be larger than the increase in government purchases? Why or why not?
Explain the difference between the government purchases multiplier and the net tax multiplier. If the MPC falls, what happens to the tax multiplier?
Disucss why it has this impact. What is the impact on the level of real GDP demanded, assuming the price level remains unchanged?
Compute the change in the level of real GDP demanded for each of the following values of the MPC.
Once the huge federal budget deficits of the 1980s and the first half of the 1990s. Why were policy makers more willing to consider discretionary fiscal policy?
Suppose that fiscal policy changes output faster than it changes the price level. How might such timing play a role in the theory of political business cycles?
Provide some example of automatic stabilizers. What is the impact of automatic stabilizers on disposable income as the economy moves through the business cycle?
In recent years, the scores in baseball have steadily increased. Most experts believe this is due to the expansion of new teams into the league.
How does your business go about estimating its sales? (This is often a confidential procedure.)
What will the new level of nonborrowed reserves? If interest rates do not change, what will be the new level of total reserves?
How do governments borrow funds to finance deficit spending? What is likely to happen to interest rates in the market?
Calculate the premerger Herfindahl-Hirschman index (HHI) for this market.
What type of monetary policy has the Federal Reserve been using for the past year (easy/expansionary, tight/contractionary, or neutral/non-involvement)?
How the economy affects the success of the oil industry as well as how it can influence the industry in a negative way.
What are the effects on American wages and purchasing power of the continued outsourcing of labor overseas.
Discuss the barriers to entry into an industry. Explain how each barrier can foster either monopoly or oligopoly.
Why might price collusion occur in oligopolistic industries? Assess the economic desirability of collusive pricing. What are the main obstacles to collusion?
Draw a graph and estimate the lowest possible per vehicle cost (to the nearest 5%). Need a graph.
Explain why this pollution creates inefficiency in the turkey market this pollution and illustrate the inefficiency on a graph.
Draw the supply curve for an individual firm. On a separate graph, draw the demand and supply curves for the industry as a whole.
Calculate the profit-maximizing price/output combination and economic profits