AS/AD model

Dear OTA, (a)Why was the AS/AD model developed, and what limitations of the S/D model did it overcome? (b) List a real world example supports your response.

International trade

Dear OTA, Please try your best to respond. I am very unsure. Thank you! Make the argument, pro's and con's, for returning to the gold standard. List the positive and negative effects of reversing the current policy. E.g., How might this affect international trade? Our trade balance? Our currencies value vis a vis other c ...continues

(Government Spending)

How do changes in disposable income affect government purchases; and the government purchase function? How do changes in net taxes affect the consumption function?

Macroeconomics - Aggregate Demand schedule

1. If the public's demand for US currency increased by $100 Million what action in the "open market" would the Fed have to take to prevent bank reserves from falling? 2. Which of the following A or B would have a larger impact on AD? Explain your answer. A) A program of tax rebates distributed uniformly across the pop ...continues

(Long-Run Aggregate Supply)

The long-run aggregate supply curve is vertical at the economy's potential output level. Why is the long-run aggregate supply curve located at his level of output rather than below or above the potential output level?

(Changes in Aggregate Supply)

What are supply shocks? Distinguish between beneficial and adverse supply shocks. Do such shocks affect the short-run supply curve, the long-run supply curve, or both? What is the resulting impact on potential GDP?

Long-Run Adjustment

The ability for the economy to eliminate any imbalances between actual and potential output is sometimes called self-correction. Using an aggregate supply and aggregate demand diagram, show why this self-correcting process involves only temporary periods of inflation or deflation.

(Fiscal Policy Effectiveness)

Determine whether each of the following would make fiscal policy more effective or less effective: a. A decrease in the marginal propensity to consume b. Shorter lags in the effect of fiscal policy c. Consumers suddenly becoming more concerned about permanent income that about current income d. More accurate measurement of t ...continues

(Balancing the federal Budget)

Now that the huge federal budget deficits of the 1980s and the first half of the 1990s have been reduced, why would policy makers be more inclined to use discretionary fiscal policy?

Demand and supply

Here is a list of written questions on economics. See attached file for full problem description.