Questions from Macroeconomics


Q: Some income from capital is taxed twice. Explain.

Some income from capital is taxed twice. Explain.

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Q: This chapter explains that investment can be increased both by reducing taxes

This chapter explains that investment can be increased both by reducing taxes on private saving and by reducing the government budget deficit. a. Why is it difficult to implement both of these policie...

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Q: Assume that the banking system has total reserves of $100 billion

Assume that the banking system has total reserves of $100 billion. Assume also that required reserves are 10 percent of checking deposits and that banks hold no excess reserves and households hold no...

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Q: How would the following transactions affect U.S. exports,

How would the following transactions affect U.S. exports, imports, and net exports? a. An American art professor spends the summer touring museums in Europe. b. Students in Paris flock to see the late...

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Q: Why can’t the Fed control the money supply perfectly?

Why can’t the Fed control the money supply perfectly?

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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...

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Q: Use the theory of liquidity preference to explain how a decrease in

Use the theory of liquidity preference to explain how a decrease in the money supply affects the equilibrium interest rate. How does this change in monetary policy affect the aggregate-demand curve?

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Q: In which of the following circumstances is expansionary fiscal policy more likely

In which of the following circumstances is expansionary fiscal policy more likely to lead to a short-run increase in investment? Explain. a. When the investment accelerator is large or when it is smal...

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Q: What adverse effect might be caused by tax incentives to increase saving

What adverse effect might be caused by tax incentives to increase saving?

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Q: Suppose that Congress passes a law requiring employers to provide employees some

Suppose that Congress passes a law requiring employers to provide employees some benefit (such as healthcare) that raises the cost of an employee by $4 per hour. a. What effect does this employer mand...

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