EBK BRIEF PRINCIPLES OF MACROECONOMICS
7th Edition
ISBN: 9780100469884
Author: Mankiw
Publisher: YUZU
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Question
Chapter 18, Problem 3PA
(a):
To determine
Change in the level of investment.
(b):
To determine
Changes in government policy.
(c):
To determine
Government actions.
(d):
To determine
The problem of time inconsistency.
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Suppose you are the president of a hypothetical economy. You have to fix healthcare and run the automobile industry . But Swine flu is breaking all over.
a) We know that the economy also suffers from sour expectations about future productivity. Represent in a neatly drawn ISLM figure that, all else equal, those expectations, in conjunction with the flu outbreak described in part A above, could result in a decline in GDP and a decline in real interest rates without any change in the price level.
b) Why do prices not rise in the scenario described in part A?
Identify how planned investment will change in each scenario.
In an effort to reduce constant budget deficits, Congress announces plans to increase the corporate income tax rate.
Due to the Congress, planned investment will increase, decrease, or stay the same?
A major recession has reduced consumption spending, which has hurt profit levels for Aston-Benz, a high-end car manufacturer. Due to the recession, planned investment will increase, decrease, or stay the same?
Please use the AD-AS model to analyze the effects of monetary policy and fiscal policy on economic outcome in an open economy:
a. Please show graphically the shifting of the AD curve after the Fed conducts an expansionary monetary policy in a closed economy (A closed economy means there is no international trade.). How do the price level and the real GDP change?
b. Suppose the economy becomes an open economy. Please revise the result that you get in part (a). Please explain how you get the new result using the AD-AS model.
c. Please show graphically the shifting of the AD curve after the federal government conducts an expansionary fiscal policy in a closed economy. Please show the crowding-out effect. How do the price level and the real GDP change?
d. Suppose the economy becomes an open economy. Please revise the result that you get in part (c). Please explain how you get the new result based on the AD-AS model.
Chapter 18 Solutions
EBK BRIEF PRINCIPLES OF MACROECONOMICS
Ch. 18.1 - Prob. 1QQCh. 18.2 - Prob. 2QQCh. 18.3 - Prob. 3QQCh. 18.4 - Prob. 4QQCh. 18.5 - Prob. 5QQCh. 18.6 - Prob. 6QQCh. 18 - Prob. 1QCMCCh. 18 - Prob. 2QCMCCh. 18 - Prob. 3QCMCCh. 18 - Prob. 4QCMC
Ch. 18 - Prob. 5QCMCCh. 18 - Prob. 6QCMCCh. 18 - Prob. 1QRCh. 18 - Prob. 2QRCh. 18 - Prob. 3QRCh. 18 - Prob. 4QRCh. 18 - Prob. 5QRCh. 18 - Prob. 6QRCh. 18 - Prob. 7QRCh. 18 - Prob. 8QRCh. 18 - Prob. 9QRCh. 18 - Prob. 10QRCh. 18 - Prob. 1PACh. 18 - Prob. 2PACh. 18 - Prob. 3PACh. 18 - Prob. 4PACh. 18 - Prob. 5PACh. 18 - Prob. 6PACh. 18 - Prob. 7PACh. 18 - Prob. 8PA
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