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1.Expound on this quote. "The economy may easily slow down or expand in the next couple years. The reason is that there are a few optimistic factors, but there also are a few pessimistic ones. Among the positive variables are first, expansionary monetary policy, extremely strong fiscal policy with the stimulus bills passed in the last few months and a lot of savings, which have not been spent due to the virus. However, there are three key weaknesses. One is the high incidence of the virus and the corollary that people are afraid to spend by going out. The second is the woeful investment in infrastructure of all sorts, which has occurred in the last four decades. The third is the increase in the last four decades in inequality of income and wealth, which makes the masses, poor and most middle income people, lose substantial buying power.

1.Expound on this quote. "The economy may easily slow down or expand in the next couple years. The reason is that there are a few optimistic factors, but there also are a few pessimistic ones. Among the positive variables are first, expansionary monetary policy, extremely strong fiscal policy with the stimulus bills passed in the last few months and a lot of savings, which have not been spent due to the virus. However, there are three key weaknesses. One is the high incidence of the virus and the corollary that people are afraid to spend by going out. The second is the woeful investment in infrastructure of all sorts, which has occurred in the last four decades. The third is the increase in the last four decades in inequality of income and wealth, which makes the masses, poor and most middle income people, lose substantial buying power.

Economics: Private and Public Choice (MindTap Course List)
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter12: Fiscal Policy, Incentives, And Secondary Effects
Section: Chapter Questions
Problem 1CQ
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1.Expound on this quote. "The economy may easily slow down or expand in the next couple years. The reason is that there are a few optimistic factors, but there also are a few pessimistic ones. Among the positive variables are first, expansionary monetary policy, extremely strong fiscal policy with the stimulus bills passed in the last few months and a lot of savings, which have not been spent due to the virus. However, there are three key weaknesses. One is the high incidence of the virus and the corollary that people are afraid to spend by going out. The second is the woeful investment in infrastructure of all sorts, which has occurred in the last four decades. The third is the increase in the last four decades in inequality of income and wealth, which makes the masses, poor and most middle income people, lose substantial buying power. 2. How does monetary policy and financial variables, generally, affect the economy, the stock and bond markets? Does money determine those markets or is it the other way around according to empirical evidence?
Transcribed Image Text:1.Expound on this quote. "The economy may easily slow down or expand in the next couple years. The reason is that there are a few optimistic factors, but there also are a few pessimistic ones. Among the positive variables are first, expansionary monetary policy, extremely strong fiscal policy with the stimulus bills passed in the last few months and a lot of savings, which have not been spent due to the virus. However, there are three key weaknesses. One is the high incidence of the virus and the corollary that people are afraid to spend by going out. The second is the woeful investment in infrastructure of all sorts, which has occurred in the last four decades. The third is the increase in the last four decades in inequality of income and wealth, which makes the masses, poor and most middle income people, lose substantial buying power. 2. How does monetary policy and financial variables, generally, affect the economy, the stock and bond markets? Does money determine those markets or is it the other way around according to empirical evidence?
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