Q: The federal government spending (relative to the size of the economy
The federal government spending (relative to the size of the economy) is rising again, after years of comparative “austerity.” How will this development affect GDP in the United Sates if the higher sp...
See AnswerQ: Explain why G has the same multiplier as I, but taxes
Explain why G has the same multiplier as I, but taxes have a different multiplier.
See AnswerQ: Advocates of lower taxes on capital gains argue that this type of
Advocates of lower taxes on capital gains argue that this type of tax cut will raise aggregate supply by spurring business investment. Compare the effects on investment, aggregate supply, and tax reve...
See AnswerQ: If ours were a barter economy, how would you pay your
If ours were a barter economy, how would you pay your tuition bill? What if your college did not want the goods or services you offered in payment?
See AnswerQ: How is “money” defined, both conceptually and in practice
How is “money” defined, both conceptually and in practice? Does the U.S. money supply consist of commodity money, full-bodied paper money, or fiat money?
See AnswerQ: What is fractional reserve banking, and why is it the key
What is fractional reserve banking, and why is it the key to bank profits? (Hint: What opportunities to make profits would banks lose if reserve requirements were 100 percent?) Why does fractional res...
See AnswerQ: After 2008-2014, a rash of bank failures occurred in
After 2008-2014, a rash of bank failures occurred in the United States. Explain why these failures did not lead to runs on banks.
See AnswerQ: Excess reserves make a bank less vulnerable to runs. Why,
Excess reserves make a bank less vulnerable to runs. Why, then, don’t bankers like to hold excess reserves? What circumstances might persuade them that it would be advisable to hold excess reserves?
See AnswerQ: If the government takes over a failed bank with liabilities (mostly
If the government takes over a failed bank with liabilities (mostly deposits) of $2 billion, pays off the depositors, and sells the assets for $1.5 billion, where does the missing $500 million come fr...
See AnswerQ: If domestic expenditure (the sum of C + I + G
If domestic expenditure (the sum of C + I + G in the economy described in Test Yourself Question 1) is as shown in the following table, construct a 45° line diagram and locate the equilibri...
See Answer
