Questions from Macroeconomics

Q: The Federal Reserve’s target rate for the federal funds rate a

The Federal Reserve’s target rate for the federal funds rate a. is an extra policy tool for the central bank, in addition to and independent of the money supply. b. commits the Fed to set a particular...

Q: Suppose a computer virus disables the nation’s automatic teller machines, making

Suppose a computer virus disables the nation’s automatic teller machines, making withdrawals from bank accounts less convenient. As a result, people want to keep more cash on hand, increasing the dema...

Q: The government spends $3 billion to buy police cars. Explain

The government spends $3 billion to buy police cars. Explain why aggregate demand might increase by more or less than $3 billion.

Q: Suppose a wave of negative “animal spirits” overruns the economy

Suppose a wave of negative “animal spirits” overruns the economy, and people become pessimistic about the future. What happens to aggregate demand? If the Fed wants to stabilize aggregate demand, how...

Q: If a nation’s currency doubles in value on foreign exchange markets,

If a nation’s currency doubles in value on foreign exchange markets, the currency is said to ________, reflecting a change in the ________ exchange rate. a. appreciate, nominal b. appreciate, real c....

Q: When an adverse supply shock shifts the short-run aggregate-

When an adverse supply shock shifts the short-run aggregate-supply curve to the left, it also a. moves the economy along the short-run Phillips curve to a point with higher inflation and lower unemplo...

Q: Define net exports and net capital outflow. Explain how and why

Define net exports and net capital outflow. Explain how and why they are related.

Q: How would the following transactions affect U.S. net capital

How would the following transactions affect U.S. net capital outflow? Also, state whether each involves direct investment or portfolio investment. a. An American cellular phone company establishes an...

Q: Give an example of a favorable shock to aggregate supply. Use

Give an example of a favorable shock to aggregate supply. Use the model of aggregate demand and aggregate supply to explain the effects of such a shock. How does it affect the Phillips curve?

Q: Describe the economic logic behind the theory of purchasing-power parity

Describe the economic logic behind the theory of purchasing-power parity.