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Suppose tax policies are changed to encourage saving.Explain how the income effect and substitution effect influence the amount saved.

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Tax policies designed to encourage savin...

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Suppose a country has a real growth rate of 3%.Government spending is 75 billion units of currency and its tax revenues are 60 billion units of currency.The current national debt is 300 billion units of currency.At what inflation rate will its debt-to-income ratio remain unchanged?

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Government spending exceeds tax revenues...

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What is the benefit of a high saving rate?

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A high saving rate provides mo...

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Monetary policy affects aggregate demand with a lag.Approximately how long does it take for monetary policy actions to affect aggregate demand?

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A lag of six months ...

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Explain why policy lags could make stabilization policies counterproductive.

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As the textbook explains, it takes time ...

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Means-tested government programs tend to reduce saving.What are means-tested programs and how do they reduce saving?

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Means-tested benefits give assistance, o...

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Using typical estimates of the sacrifice ratio,how much output would likely be sacrificed to reduce inflation by 3 percent?

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The typical estimate of the sacrifice ra...

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Explain why fiscal policy actions typically work with a lag.

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Fiscal policy works with a lag primarily...

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What is the political business cycle and how does it relate to whether the central bank should have discretion or use a rule?

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The political business cycle describes t...

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Suppose that changes in aggregate demand tended to be infrequent and that it takes a long time for the economy to return to long-run output.How would this affect the arguments of those who oppose using policy to stabilize output?

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Those who oppose stabilization policy mo...

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What did the actions of the Federal Reserve during the 1990's demonstrate about monetary policy and rules?

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During this time the Fed achieved and ma...

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Approximately how often does the Federal Open Market Committee meet?

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The FOMC m...

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Why might policymakers attempts to stabilize the economy do more harm than good?

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Policy works with a lag. By th...

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Why is it desirable,if possible,to use policy to offset the effects of a decrease in aggregate demand?

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Because a decrease i...

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Explain the time inconsistency of monetary policy.

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Time inconsistency refers to the idea th...

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Explain how a higher rate of return on saving could,at least in theory,lead to lower saving.

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A higher rate of return on saving means ...

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Which part of the Federal Reserve determines monetary policy? How often does it meet? What does it set a target for?

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The Federal Open Mar...

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Suppose a country has had a high and relatively stable inflation rate for a long time.How might this affect the costs and benefits of inflation reduction?

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If inflation is usually about what peopl...

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If net exports fall,what actions could a central bank take to stabilize the economy?

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Increase the money s...

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Suppose that a country has an inflation rate of about 3 percent per year and a real GDP growth rate of about 3 percent per year.How large of a deficit can the government run (as a percentage of GDP)without raising the debt-to-income ratio?

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The government could run a def...

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Showing 41 - 60 of 68

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