Explain whether policy makers should be more concerned about the economy going into a recession or facing high inflation and why.

Why is there no upward or downward pressure on the inflation rate when the economy is at full employment?

What impact would an increase in the nation's money supply or the federal government's budget deficit have on the real GDP and price level in the macroeconomy?  What phase of the business cycle might this create?

Do you think policy makers should attempt to stabilize the economy ? Why ?

What can be used to reduce aggregate demand and helps to control demand pull inflation?

Suppose wages and prices are flexible, people form their expectations rationally, and they anticipate policy incorrectly.What happens?

Who is John Maynard Keynes? What time period did he write?  What did he believe about the market’s ability to recover from a recession?

The major problem facing the economy is high unemployment and weak economic growth. The inflation rate is low and stable. Therefore, the Federal Reserve decides to pursue a policy to increase the rate of economic growth. Which policy changes by the Fed would reinforce each other to achieve that objective?

b. Why do some people say that inflation is a tax? Who pays that tax? Who collects that tax? How does it work exactly? Does your answer depend on whether the world is best described by a general equilibrium (Classica economics) or disequilibrium (Keynesian)? c. Economists say that, in response to a wage rate increase, the overall labor supply may increase, decrease or remain unchained. Why aren't economists more certain about the consequences of something as simpl as a wage increase? d. The introduction of the ATM machine led to a period of price level increases. Why? Explain your answer intuitively. e. What is the "intertemporal labor substitution" effect (also known as the "Uber" effect)? Although you can use with a numerical example to illustrate your answer, make sure you explain it with words.