Monetary and fiscal policy to stimulate the economy

Monetary and fiscal policy (collectively called demand management) can be used to stimulate the economy. In essay format, provide a detailed discussion of both fiscal and monetary policy by explaining how policymakers can stimulate the economy. Your discussion should incorporate the following: - In...

The National Debt

Try the following exercises to better understand how the national debt is related to the government's budget deficit. a. Assume that the gross national debt initially is equal to $3 trillion and the federal government then runs a deficit of $300 billion i. What is the new level of gross national d...

Changes in Government Purchases

Assume that government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of real GDP demanded for each of the following values of the MPC. Then calculate the change if the government, instead of reducing its purchases,...

Calculation of Consumer Price Index

Calculate a new consumer price index for the data in the following exhibit. Assume that current-year prices of Twinkies, fuel oil, and cable TV are $0.95/package, $1.25/gallon, and $15.00/month, respectively. Calculate the current year's cost on the market basket and the value of the current year'...

Calculation of GDP via the expenditure model

Given the following annual information about a hypothetical country, answer questions a through d. Personal consumption expenditures $200 Personal taxes $50 Exports $30 Depreciation $10 Government purchases $50 Gross private domestic investments $40 Imports $40 Government tra...

Cost of a Market Basket of Goods

1) during the course of a year, the labor force consists of the same 995 people of these, 17 lack skills that employers desire and hence remain unemployed throughout the year. All the same time , every month during the year, 38 different people become unemployed, and 38 other different people who ...

Federal Budet and Federal Debt

Why does the budget require a forecast to the economy? Under what circumstances would actual government spending and tax revenue fail to match the budget as approved? Federal Debt what has happened to the federal debt since 2008 as measured relative to GDP? Fiscal Policy: In the current c...

Scarcity of Resources

What determines whether or not a resource is scarce? In economics, what is the significance of the concept scarcity?

Restructuring Sovereign Debt: Government Bonds

Suppose a country plans to restructure its sovereign debt by swapping its existing government bonds for bonds that have (i) half the face value, (ii) half the coupon rate, and (iii) double the remaining time to maturity. Assuming that the relevant opportunity cost remains the same, explain how each ...

Fear of Default and Bond Yields

Suppose investors believe the US will temporarily default on its debt payments in three months due to failing to agree to lifting the debt ceiling. What effect has this on the price and yield of US treasury bills and bonds with a maturity of 1 month, 3 month and 3 years and how does it affect the sh...

Supply shocks and price stabilization

Both the long-run aggregate supply curve and the short-run aggregate supply curve shift in response to changes in the availability of labor or capital or to changes in technology and productivity. A widespread temporary change in the prices of factors of production, however, can cause a shift in the...

Monopoly profit

The market demand at the beginning is D1, and its corresponding marginal revenue is MR1. The initial ATC is ATC1, and the original supply is MC1. Therefore, the monopolist sells _____ units at $ _____ per unit, and his/her total profit is approximately $____________. After a given time period, due...

Cost Curves in Perfect Competition and Monopolistic Competition

C7 TQ3) The following graph (see attachment) shows the cost curves for a perfectly competitive firm. Identity the shutdown point, the breakeven point, and the firm's short-run supply curve. C7 TQ5) Draw graphs showing a perfectly competitive firm and industry in long-run equilibrium. (a) How d...

Economies of Scale: Cost Curves and Output

Industry studies often suggest that firms may have long-run average cost curves that show some output range over which there are economies of scale and a wide range of output over which long-run average cost is constant; finally, at very high output, there are diseconomies of scale. Draw...

G in GDP component

3. Does the G in C + I + G + NX represent government spending (total government expenditures) or government purchase? How do government purchases and government spending differ? Does G include government investment? 4. Does the I in C + I + G + NX include purchases of stocks and bonds? Why or why...

Demand and Supply for Wheat and Other Market Situations

3. How would each of the following affect the Canadian market supply curve for wheat? a. A new and improved crop rotation technique is discovered. b. The price of fertilizer falls. c. The government offers new tax breaks to farmers. d. The Prairies suffer a drought. 4. Indicate how you th...

Federal Reserve's Quantitative Easing Program

Please help with the following problem: The federal reserve has announced an end to their controversial quantitative easing bond purchase program. How will the economy react to this decision?

Ramsey Taxation Problem

Suppose there are two medical goods. Heart surgery and plastic (cosmetic) surgery. The market price for the heart surgery is $100k, the market price for plastic surgery is $10k. The price elasticity of demand for heart surgery is -0.2. The price elasticity of demand for plastic surgery is -3.0. ...

Housing Bubble & Financial Crisis

I am having trouble being objective answering the following questions even after reading the topic twice. I would appreciate help from someone who has a good knowledge of the topic without the personal views I have. The main thing I am looking for is an objective opinion that one single anyone out t...

International Trade, Exchange Rates, and Macroeconomic Policy

Chapter 7. Problems 3 Suppose that ex is the exchange rate between the U.S. dollar and the Chinese yuan in that ex indicates the number of yuan that can be purchased with one dollar. The demand for dollars, denoted, D$, is given by the equation D$= 2,800 - 200ex. The supply of dollars, denoted, S$...

Chapter 5 wk 5 Problem 1

. Problem 1 Suppose that the equation for autonomous planned spending, Apr is Ap = 6,200-200r and the value of the multiplier, k, is 2.5. (a) Derive the equation for the IS curve, Y = kAp. Graph the IS curve for interest rates between 0 and 8, with intervals of one-half of a percentage point. ...

Demand and Supply Curve Shift After Market Circumstance

In each of the following scenarios, explain what happens to either the demand or supply curve (a) Supply of orange juice if Florida is hit with very severe weather? (b) Demand for beef if there is a widespread concern for flu coming from chickens?

Eisenhower Guns vs Butter Discussion

In a speech before the American Society of Newspaper Editors (April 16, 1953), President Eisenhower stated: "Every gun that is made, every warship launched, every rocket fired signifies, in the final sense, a theft from those who hunger and are not fed, those who are cold and not clothed. This world...

Opinion on the 2008 financial crisis

The financial crisis of 2008 caused macroeconomists to rethink monetary and fiscal policies. Economists, financial experts, and government policy makers are victims of what former Fed chairman Alan Greenspan called a "once in a century credit tsunami"—in other words, nobody saw it coming. Based...

Fiscal Policy and Government Spending

Two important policy goals of the government and the Fed are to keep unemployment and inflation low, while at the same time making sure that GDP is increasing at an average of 3% per year. It is important to have the right mix of policies and that all the variables be timed perfectly. Part 1: As...

The Monetary Policy Tools

Identify the four major tools of monetary policy. Then describe how changes in the Fed's major policy tools leads to: 1. Expansionary monetary policies 2. Restrictive or contradictory monetary policies.