Using your knowledge of production function, discuss how low interest rates may have helped economic growth. Why do you think we still have high unemployment? Why aren’t wages increasing? If you were to advise policy makers on economic policies, what would be your advice? Do you agree with the Fed’s quantitative easing policy?
1. 1) In the classical, full employments, long run, WHAT makes the demand for the economy's output (also called "E") equal to the supply ?
2) Using the long run classical saving and investment graph, how real income Y changes when there is a rise in business confidence?
3) Show (graph) and explain what is meant by the term "crowding out"