Q: Suppose that higher income implies higher imports and thus lower net exports
Suppose that higher income implies higher imports and thus lower net exports. That is, the net-exports function is NX = NX(e, Y ). Examine the effects in a small open economy of a fiscal expansion on...
See AnswerQ: Assume that people have rational expectations and that the economy is described
Assume that people have rational expectations and that the economy is described by the sticky price model. Explain why each of the following propositions is true. a. Only unanticipated changes in the...
See AnswerQ: Explain two ways in which a recession might raise the natural rate
Explain two ways in which a recession might raise the natural rate of unemployment.
See AnswerQ: Suppose a central bank does not satisfy the Taylor principle; in
Suppose a central bank does not satisfy the Taylor principle; in particular, assume that up is slightly less than zero, so the nominal interest rate rises less than one-for-one with inflation. Use a g...
See AnswerQ: When real GDP declines during a recession, what typically happens to
When real GDP declines during a recession, what typically happens to consumption, investment, and the unemployment rate?
See AnswerQ: Demographers predict that the fraction of the population that is elderly
Demographers predict that the fraction of the population that is elderly will increase over the next 20 years. What does the life-cycle model predict for the influence of this demographic change on th...
See AnswerQ: Give an example in which someone might exhibit time-inconsistent preferences
Give an example in which someone might exhibit time-inconsistent preferences.
See AnswerQ: The United States experienced a large increase in the number of births
The United States experienced a large increase in the number of births in the 1950s. People in this baby-boom generation reached adulthood and started forming their own households in the 1970s. a. Use...
See AnswerQ: List three policy rules that the Fed might follow. Which of
List three policy rules that the Fed might follow. Which of these would you advocate? Why?
See AnswerQ: Do you find the traditional or the Ricardian view of government debt
Do you find the traditional or the Ricardian view of government debt more credible? Why?
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