Q: In December 2008, the Fed reduced the federal funds rate to
In December 2008, the Fed reduced the federal funds rate to approximately zero. What should it have done then? Why? What did it actually do?
See AnswerQ: Newspaper reports frequently suggest that the administration (regardless of who is
Newspaper reports frequently suggest that the administration (regardless of who is president) wants the Fed to lower interest rates. In view of your answer to Test Yourself Question 3, why do you thin...
See AnswerQ: Given the current state of the economy, what sort of fiscal
Given the current state of the economy, what sort of fiscal-monetary policy mix seems most appropriate to you now?
See AnswerQ: Country A has a cold climate with a short growing season,
Country A has a cold climate with a short growing season, but a highly skilled labor force (think of Finland). What sorts of products do you think it is likely to produce? What are the characteristics...
See AnswerQ: During the first half of the 1980s, inflation in (West
During the first half of the 1980s, inflation in (West) Germany was consistently lower than that in the United States. What, then, does the purchasing-power parity theory predict should have happened...
See AnswerQ: Under the old gold standard, what do you think happened to
Under the old gold standard, what do you think happened to world prices when a huge gold strike occurred in California in 1849? What do you think happened when the world went without any important new...
See AnswerQ: The example in the appendix showed that the Student Price Index (
The example in the appendix showed that the Student Price Index (SPI) rose by 42 percent from 1987 to 2017. You can understand the meaning of this better if you do the following: a. Use Table 5 to com...
See AnswerQ: Suppose you want to reserve a hotel room in London for the
Suppose you want to reserve a hotel room in London for the coming summer but are worried that the value of the pound may rise between now and then, making the room too expensive for your budget. Expla...
See AnswerQ: If inflation is lower in Germany than in Italy, and the
If inflation is lower in Germany than in Italy, and the exchange rate between the two countries is fixed (as it is, because of the monetary union), what is likely to happen to the balance of trade bet...
See AnswerQ: Explain why a currency depreciation leads to an improvement in a country’s
Explain why a currency depreciation leads to an improvement in a country’s trade balance.
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