Ec 301 Midterm Essay

2033 Words Jan 31st, 2013 9 Pages
Midterm Intermediate Macroeconomics
1. How are presidential election outcomes related to the performance of the economy?
Presidential elections and the economy have a very close relationship and they go together hand and hand. Usually when the economy is good and opinion of the government is positive, the incumbent or the party of the last president wins the election. People tend the lean towards why change a good thing.
A couple of theories exist in the relationship of the economy and presidents. The first one is that voters will vote for whichever president they feel shares the same economic vales that they have. Usually the poor vote liberal or for bigger government because they think they will provide more economic relief them and
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We have also encountered another recession in 2007 because of risky trading/investment tactics on Wall Street that caused the housing market to crash. This put unemployment at an all-time high since the depression era, and destroyed faith in America’s economic system. Firms were reluctant to investment in the American public because they were afraid we would lose our jobs. Also, we have fought in two wars. One of the wars has been the longest in American history. This dries up resources and ups government spending. The government has less money to investment its citizens and firms have fewer resources to produce products for consumers to buy.
5. Briefly explain how the following would shift the IS function to the right.
a. A change to lump-sum taxation (Specify whether increase or decrease is needed to shift IS curve to the right.)
Decreasing a lump sum tax will shift the IS curve to the right. Decreasing the lump sum tax will increase consumer income, which will cause aggregate demand to go up.
b. A change to government spending (Specify whether increase or decrease is needed to shift IS curve to the right.)
Increasing government spending will shift the IS curve to the right. Increasing government spending will cause aggregate demand to go up, and shift the IS curve to the right.
6. Explain briefly how a change to the following MS, MD, or P

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