Questions from Macroeconomics

Q: Let’s examine how the goals of the Fed influence its response to

Let’s examine how the goals of the Fed influence its response to shocks. Suppose that in scenario A the Fed cares only about keeping the price level stable and in scenario B the Fed cares only about k...

Q: Why does the aggregate demand curve sloped downward?

Why does the aggregate demand curve sloped downward?

Q: If a war broke out abroad, it would affect the U

If a war broke out abroad, it would affect the U.S. economy in many ways. Use the model of the large open economy to examine each of the following effects of such a war. What happens in the United Sta...

Q: Although our development of the Keynesian cross in this chapter assumes that

Although our development of the Keynesian cross in this chapter assumes that taxes are a fixed amount, most countries levy some taxes that rise automatically with national income. (Examples in the Uni...

Q: Why does the IS curve slope downward?

Why does the IS curve slope downward?

Q: Consider the economy of Hicksonia. a. The consumption function

Consider the economy of Hicksonia. a. The consumption function is given by C = 300 + 0.6(Y - T).The investment function is I = 700 - 80r. Government purchases and taxes are both 500. For this economy,...

Q: What is the impact of a decrease in the money supply on

What is the impact of a decrease in the money supply on the interest rate, income, consumption, and investment?

Q: Suppose that policymakers in a large open economy want to raise the

Suppose that policymakers in a large open economy want to raise the level of investment without changing aggregate income or the exchange rate. a. Is there any combination of domestic monetary and fis...

Q: A small open economy with a floating exchange rate is in recession

A small open economy with a floating exchange rate is in recession with balanced trade. If policymakers want to reach full employment while maintaining balanced trade, what combination of monetary and...

Q: In the Mundell–Fleming model with floating exchange rates, explain

In the Mundell–Fleming model with floating exchange rates, explain what happens to aggregate income, the exchange rate, and the trade balance when a quota on imported cars is removed. What would happe...