Questions from General Economics

Q: Suppose GDP is $16 trillion, with $10 trillion coming

Suppose GDP is $16 trillion, with $10 trillion coming from consumption, $2 trillion coming from gross investment, $3.5 trillion coming from government expenditures, and $500 billion coming from net ex...

Q: Suppose that the money supply and the nominal GDP for a hypothetical

Suppose that the money supply and the nominal GDP for a hypothetical economy are $96 billion and $336 billion, respectively. What is the velocity of money? How will households and businesses react if...

Q: Assume the following information for a hypothetical economy in year 1:

Assume the following information for a hypothetical economy in year 1: money supply = $400 billion; long-term annual growth of potential GDP = 3 percent; velocity = 4. Assume that the banking system i...

Q: Suppose GDP is $15 trillion, with $8 trillion coming

Suppose GDP is $15 trillion, with $8 trillion coming from consumption, $2.5 trillion coming from gross investment, $3.5 trillion coming from government expenditures, and $1 trillion coming from net ex...

Q: Suppose that this year’s nominal GDP is $16 trillion. To

Suppose that this year’s nominal GDP is $16 trillion. To account for the effects of inflation, we construct a price-level index in which an index value of 100 represents the price level five years ago...

Q: How can patents speed up the process of creative destruction? How

How can patents speed up the process of creative destruction? How can patents slow down the process of creative destruction? How do differences in manufacturing costs affect which industries would be...

Q: Assume that the following asset values (in millions of dollars)

Assume that the following asset values (in millions of dollars) exist in Ironmania: Federal Reserve Notes in circulation = $700; Money market mutual funds (MMMFs) held by individuals = $400; Corporate...

Q: Assume that Jimmy Cash has $2,000 in his checking

Assume that Jimmy Cash has $2,000 in his checking account at Folsom Bank and uses his checking account card to withdraw $200 of cash from the bank’s ATM machine. By what dollar amount did the M1 money...

Q: Suppose the price level and value of the U.S.

Suppose the price level and value of the U.S. dollar in year 1 are 1 and $1, respectively. If the price level rises to 1.25 in year 2, what is the new value of the dollar? If, instead, the price level...

Q: Assume that securitization combined with borrowing and irrational exuberance in Hyperville have

Assume that securitization combined with borrowing and irrational exuberance in Hyperville have driven up the value of existing financial securities at a geometric rate, specifically from $2 to $4 to...