Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN: 9781305280601
Author: William J. Baumol, Alan S. Blinder
Publisher: Cengage Learning
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Chapter 20, Problem 1DQ
To determine
To Explain: The effect of rapid growth in Japan on US economy.
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If the central bank of every economy in the world lowers its interest rate, will economic activity in all these economies be boosted?
Explain the following as effects of low policy rates to the growth of an economy:
1. It can cause inflationary pressure
2. It might lead to a boost in economic growth
3. Investments are more desirable
4. There will be relatively low borrowing cost for government.
Assume a country would like to increase investment by limiting consumption. What would be the point of a policy like that? What would be the impact on the economy? Who would benefit? Who would lose out?
Chapter 20 Solutions
Macroeconomics: Principles and Policy (MindTap Course List)
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- What may happen if growth in China continues or contracts?arrow_forwardHow does globalization affect the GDP of a country and what are some ways in which globalization affects the GDP of a country?arrow_forwardHow do you think globalization has affected the economy over the past decade? In your explanation, give several examples.arrow_forward
- Explain why a policy mix would result in growth in GDP.arrow_forwardAfter reading Dani Rodrick’s article, “Why Does Globalization Fuel Populism?” First, explain how Rodrick defines populism. Second, explain why populism (as he has defined it) struggles in understanding economics and how it creates poor policies.arrow_forwardWhat creates or stimulates the rate of economic growth in the economy, in macroeconomicsarrow_forward
- In 2018, according to the International Monetary Fund, India had the world’s 7th-highest nominal GDP, the 142nd-highest nominal GDP per capita, and the 7th-highest real GDP growth rate. What does each of these indicators tell us about the Indian economy and how life in India compares to life in other countries? India has a huge economy that produces lots of goods and services (7th-highest nominal GDP), is still fairly poor (142nd-highest nominal GDP per capita), but has a rapidly increasing standard of living (7th-highest real GDP growth rate). India has a huge economy that produces lots of goods and services (142nd-highest nominal GDP per capita), is still fairly poor (7th-highest nominal GDP), but has a rapidly increasing standard of living (7th-highest real GDP growth rate). India has a huge economy that produces lots of goods and services (7th-highest nominal GDP), is still fairly poor (7th-highest real GDP growth rate), but has a rapidly increasing standard of…arrow_forwardWhy would removing a trade restriction, such as a tariff, lead to more rapid economic growth? Explain how higher savings leads to a higher standard of living. What might deter a policymaker from trying to raise the rate of saving? What is a budget deficit? How does it affect interest rates, investments and economic growth? How does the financial system coordinate saving and investment? What is the financial system, Name and describe two markets that are part of the financial system in the U.S. economy. Name and describe two financial intermediaries. GDP in 2019 was $21 trillion. Consumption equals $12 trillion. Government spending was $5 trillion. The budget deficit was $600 billion. Why do economists use real GDP rather than nominal GDP to gauge economic well-being? Define "Real" and "Nominal" GDP and explain the differences between them (Real and Nominal GDP). Explain why an economy's income must equal its expenditure.arrow_forwardHow does globalization affect current economic trends in the United States and what problems does the average consumer face due to the rising cost of inflations?arrow_forward
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