Start Discovering Solved Questions and Your Course Assignments
TextBooks Included
Active Tutors
Asked Questions
Answered Questions
To what extent would it be possible to design a society in which there was no money? What would the problems be? Could currency at least be eliminated? How?
Why should (or shouldn't) policymakers be concerned about the relatively low levels of U.S. investment that have prevailed in the last decade?
Explain why the housing market usually prospers when the (real) mortgage rates are low. Explain how this could lead to an exception to the conclusion in (a).
Explain why lenders may ration the quantity of credit rather than merely charge higher interest rates to more risky borrowers.
The number of small firms in the U.S. economy has grown substantially. What effect might this have on output fluctuations in the United States?
According to the description of business fixed investment in this chapter. What factors would determine the speed of its reaction?
What effect has the recent shift toward investment in high-tech capital goods had on the rate of depreciation?
Suppose the government cuts income taxes. Show in the IS-LM model the impact of the tax cut under two assumptions.
What is the required policy mix? Use an IS-LM diagram to show your policy proposal.
What are some of the subsidiary targets referred to in the quote? How would they be affected by alternative policy combinations?
What happens when the Fed monetizes a budget deficit? Is this something it should always try to do?
What would the LM curve look like in a classical world? If this really were the LM curve that we thought best characterized the economy.
What is crowding out, and when would you expect it to occur? In the face of substantial crowding out, which will be more successful-fiscal or monetary policy?
Discuss the circumstances under which the monetary and fiscal policy multipliers are each, in turn, equal to zero.
Define an open market sale by the Fed. Show both the immediate- and the longer-term impacts.
In the Keynesian case, what happens to equilibrium output and to prices? In the classical case, what is the effect on output and on prices?
How does an increase in the tax rate affect the IS curve? How does the increase affect the equilibrium level of income?
Suppose that consumption is, in fact, reduced by an increase in the interest rate. How will the IS curve be affected?
Explain in words how and why the income and interest sensitivities of the demand for real balances affect the slope of the LM curve.
Explain in words how and why the multiplier G and the interest sensitivity of aggregate demand affect the slope of the IS curve.
How does the IS-LM model developed in this chapter relate to the model of aggregate demand developed in Chapter 9 ?
Why? What assumption about consumption behavior leads to this result? What happens to this ratio after retirement?
What interest rate would be needed on pound securities, such as government bonds, for you to be willing to buy those securities with your dollars today.
In 1990-1992 Finland fell into serious difficulties. What adjustment policies would you recommend for such a case?
Explain first why the equilibrium levels of output and the interest rate are unaffected.