Questions from Macroeconomics

Q: Comment on the following: “Deficit spending paves the road to

Comment on the following: “Deficit spending paves the road to ruin. If we keep it up, the whole nation will go bankrupt. Even if things do not go this far, what right have we to burden our children an...

Q: This question is a variant of the previous problem that approaches things

This question is a variant of the previous problem that approaches things in the way that a fiscal policy planner might. In an economy whose consumption function and tax function are as given in Test...

Q: Explain the difference between crowding out and crowding in. Given the

Explain the difference between crowding out and crowding in. Given the current state of the economy, which effect would you expect to dominate today?

Q: When inflation and unemployment fell together in the 1990s, some observers

When inflation and unemployment fell together in the 1990s, some observers claimed that policy makers no longer faced a trade-off between inflation and unemployment. Were they correct?

Q: There is no sense in trying to shorten recessions through fiscal and

There is no sense in trying to shorten recessions through fiscal and monetary policy because the effects of these policies on the unemployment rate are sure to be temporary.” Comment on both the truth...

Q: Why is it said that decisions on fiscal and monetary policy are

Why is it said that decisions on fiscal and monetary policy are, at least in part, political decisions that cannot be made on “objective” economic criteria?

Q: What is a Phillips curve? Why did it seem to work

What is a Phillips curve? Why did it seem to work so much better in the period from 1954 to 1969 than it did in the 1970s?

Q: Explain why expectations of inflation affect the wages that result from labor

Explain why expectations of inflation affect the wages that result from labor-management bargaining.

Q: What is meant by “rational” expectations? Why does the

What is meant by “rational” expectations? Why does the hypothesis of rational expectations have such stunning implications for economic policy? Would believers in rational expectations want to shorten...

Q: It is often said that the Federal Reserve Board typically cares more

It is often said that the Federal Reserve Board typically cares more about inflation and less about unemployment than the administration. If this is true, why might presidents often worry about what t...