Questions from General Economics

Q: In the model of the open economy just developed, two markets

In the model of the open economy just developed, two markets determine two relative prices. What are the markets? What are the two relative prices?

Q: Suppose that Americans decided to spend a smaller fraction of their incomes

Suppose that Americans decided to spend a smaller fraction of their incomes. What would be the effect on saving, investment, interest rates, the real exchange rate, and the trade balance?

Q: In 1939, with the U.S. economy not yet

In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period befo...

Q: Explain why the following statements are false. a. “

Explain why the following statements are false. a. “The aggregate-demand curve slopes downward because it is the horizontal sum of the demand curves for individual goods.” b. “The long-run aggregate-s...

Q: For each of the three theories for the upward slope of the

For each of the three theories for the upward slope of the short-run aggregate-supply curve, carefully explain the following: a. how the economy recovers from a recession andreturns to its long-run eq...

Q: The economy begins in long-run equilibrium. Then one day

The economy begins in long-run equilibrium. Then one day, the president appoints a new chairman of the Fed. This new chairman is well known for her view that inflation is not a major problem for an ec...

Q: Explain whether each of the following events shifts the short-run

Explain whether each of the following events shifts the short-run aggregate-supply curve, the aggregatedemand curve, both, or neither. For each event that does shift a curve, draw a diagram to illustr...

Q: For each of the following events, explain the short-run

For each of the following events, explain the short-run and long-run effects on output and the price level, assuming policymakers take no action. a. The stock market declines sharply, reducing consume...

Q: Suppose firms become very optimistic about future business conditions and invest heavily

Suppose firms become very optimistic about future business conditions and invest heavily in new capital equipment. a. Draw an aggregate-demand/aggregate-supply diagram to show the short-run effect of...

Q: Suppose the economy is in a long-run equilibrium.

Suppose the economy is in a long-run equilibrium. a. Draw a diagram to illustrate the state of the economy.Be sure to show aggregate demand, short-run aggregate supply, and long-run aggregate supply....