Questions from Macroeconomics

Q: Bank A has a leverage ratio of 10, while Bank B

Bank A has a leverage ratio of 10, while Bank B has a leverage ratio of 20. Similar losses on bank loans at the two banks cause the value of their assets to fall by 7 percent. Which bank shows a large...

Q: Recall that money serves three functions in the economy. What are

Recall that money serves three functions in the economy. What are those functions? How does inflation affect the ability of money to serve each of these functions?

Q: If inflation is less than expected, who benefits— debtors or

If inflation is less than expected, who benefits— debtors or creditors? Explain.

Q: A can of soda costs $1.25 in the United

A can of soda costs $1.25 in the United States and 25 pesos in Mexico. What is the peso–dollar exchange rate (measured in pesos per dollar) if purchasing- power parity holds? If a monetary expansion c...

Q: Suppose the United States decides to subsidize the export of U.

Suppose the United States decides to subsidize the export of U.S. agricultural products, but it does not increase taxes or decrease any other government spending to offset this expenditure. Using a th...

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 chair of the Federal Reserve. This new chairman is well known for her view that inflation is not a major problem...

Q: What might shift the aggregate-supply curve to the left?

What might shift the aggregate-supply curve to the left? Use the model of aggregate demand and aggregate supply to trace through the short-run and long-run effects of such a shift on output and the pr...

Q: Suppose economists observe that an increase in government spending of $10

Suppose economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by $30 billion. a. If these economists ignore the possibility of crowdi...

Q: Suppose the Federal Reserve announced that it would pursue contractionary monetary policy

Suppose the Federal Reserve announced that it would pursue contractionary monetary policy to reduce the inflation rate. Would the following conditions make the ensuing recession more or less severe? E...

Q: If the central bank wants to expand aggregate demand, it can

If the central bank wants to expand aggregate demand, it can ________ the money supply, which would ________ the interest rate. a. increase, increase b. increase, decrease c. decrease, increase d. dec...