During the third quarter of 1997, Japanese GDP was falling at an annual rate of over 11 percent. Many blamed the big increase in Japan's taxes in the spring of 1997, which was designed to balance the budget. a. Explain how an increase in taxes with the economy growing slowly could cause a recession. b. If you were head of the Japanese central bank (the same as our FED), how would you respond? What impact would your policy have on the level of investment?

Question Help     List the sequence of events in the transmission from a rise in the federal funds rate to a change in the inflation rate. When the Fed raises the federal funds​ rate, other​ short-term interest rates and the exchange rate​ _______.     A. rise the same day or the next​ day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to decrease   B. rise within a few weeks or months but the​ long-run interest rate rises almost immediately   C. and the​ long-term interest rate rise the same day or the next​ day, but it takes a few weeks for consumption expenditure and investment to decrease   D. rise the same day or the next​ day, but it takes a few weeks through a few months for the quantity of money and supply of loanable funds to increase When the Fed raises the federal funds​ rate, consumption​ expenditure, investment, and net exports​ _______ and aggregate demand​ _______.     A.…

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The SARB interest rate has been increasing since the beginning of this year. If the Monetary Policy Committee (MPC) decides to grow the economy. What impact does this have on the borrower, on wages and net exports? What is the overall effect on the economy? Use the relevant graphs.

Is savings harmful or beneficial to the economy? Contrast the two views on this issue.

Consider an economy currently in recession. Which is NOT a policy move that could assist the economy, as discussed in class? Raising the money supply Raising government spending Lowering bank reserves Lowering interest rates

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According to Keynes, increasing the money supply should lower interest rates in the economy. Milton Friedman notes that while it is true that expansionary monetary policy can lower interest rates, it is only part of the story. a.    Briefly explain under what conditions an expansionary monetary policy will indeed lower interest rates, both in the short and long run. A graph may help answering this question.b.    Briefly explain under what conditions an expansionary monetary policy will increase interest rates. A graph may help answering this question.

Africa's government has increased its spending this year, leading to a growing budget deficit. How will this growing budget deficit affect the economy?  Your answer should discuss interest rates, private investment, and aggregate expenditure.

The last personal savings rate recorded by the Federal Reserve database was 2.4%. Assume your average tax rate is 35%. The Federal Government recently spent $1.2T on “infrastructure”. Assuming this stands, answer the following question.  1. How much disposable income would the third iteration of this spending generate?  1.1A. What is the estimated increase in aggregate demand as a result of this bill assuming no tax  increase?