Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 36, Problem 1PA
Subpart (a):
To determine
Natural restorative powers of the economy.
Subpart (b):
To determine
Natural restorative powers of the economy.
Subpart (c):
To determine
Natural restorative powers of the economy.
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Suppose an economy is experiencing recession. From the list below, select two (2) policy tools that the government can use to restore the economy back to a long-run macroeconomic equilibrium.
Note: if you select more than two policy tools, 1 point will be taken for each additional choice.
A.
The government can decrease income taxes.
B.
The government can increase interest rates.
C.
The government can increase government spending.
D.
The government can send optimistic messages to boost expectations.
E.
The government can expand the resource base.
Fill in the blank.
ALEX: Hi, Becky. I’m intrigued to see how macroeconomics allows us to explain recent economic events such as the Great Recession that affected so many people. But there’s one thing I don’t understand. Was the collapse of the housing bubble the only cause of the recession, or were there other factors as well?
BECKY: Hi, Alex. I agree that macroeconomic theory offers an entirely new perspective on how the economy works. To answer your question, the crash of the housing market was a major factor but not the only cause of the Great Recession. The professor mentioned that the __________ (options: financial, fiscal, government) system deteriorated as well, an event that deepened the economic downturn even further.
ALEX: I see. So the bursting of the housing bubble caused the initial decline in aggregate demand. Then the financial crisis caused aggregate demand to decline even more. Could you also help me understand how to use the aggregate demand and aggregate supply model…
The following are examples of macroeconomic questions that remain debated among economists and policy-makers:
1. Does economic growth create inequality in income and wealth?
2. Do lower wages reduce unemployment?
3. Is there a trade-off between unemployment and inflation?
4. Is a large government debt a problem?
5. Should central banks target inflation in asset prices or only in consumer prices?
Choose any two of the above questions and in each case briefly outline the economic reasoning behind different viewpoints.
Chapter 36 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Ch. 36.1 - Prob. 1QQCh. 36.2 - Prob. 2QQCh. 36.3 - Prob. 3QQCh. 36.4 - Prob. 4QQCh. 36.5 - Prob. 5QQCh. 36.6 - Prob. 6QQCh. 36 - Prob. 1QRCh. 36 - Prob. 2QRCh. 36 - Prob. 3QRCh. 36 - Prob. 4QR
Ch. 36 - Prob. 5QRCh. 36 - Prob. 6QRCh. 36 - Prob. 7QRCh. 36 - Prob. 8QRCh. 36 - Prob. 9QRCh. 36 - Prob. 10QRCh. 36 - Prob. 1QCMCCh. 36 - Prob. 2QCMCCh. 36 - Prob. 3QCMCCh. 36 - Prob. 4QCMCCh. 36 - Prob. 5QCMCCh. 36 - Prob. 6QCMCCh. 36 - Prob. 1PACh. 36 - Prob. 2PACh. 36 - Prob. 3PACh. 36 - Prob. 4PACh. 36 - Prob. 5PACh. 36 - Prob. 6PACh. 36 - Prob. 7PACh. 36 - Prob. 8PA
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