Explain whether each of the following is an example of a macroeconomic concern or a microeconomic concern.1. Ford Motor Company is contemplating increasing the production of full-size SUVS based on projected future consumer demand2. Congress is debating the option of implementing a value added tax as a means to cut the federal deficit.3. The Federal Reserve announces it is increasing the discount rate in an attempt to slow the rate of inflation.4. The Bureau of Labor Statistics projects a 22.5 percent increase in the number or workers in the healthcare industry from 2008 to 2018.

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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If the government of country H increases tax rate, tax revenue decreases. Choose a graph which shows the Laffer curve and correctly describes the current status of country H. ° Tax revenue The economy is ° Tax currently at point A revenue The economy is currently at point A ○ Tax revenue The economy is currently point A Tax revenue The economy is currently at point A Tax rate Tax rate Tax rate Tax rate
In early 2020, some commentators warned that the unprecedented global pandemic crisis would lead to Greater Depression. This type of prediction led many to revisit the Great Depression in the 1930s to see if there is any parallel. At the time, no one could rule out the possibility of another depression. Yet many economists believed that the very mistakes that had led to the Great Depression could be avoided this time. What are the policy mistakes that had led to the Great Depression?a. Fed failed to follow Walter Bagehot’s dictum that during a financial panic, central banks should lend freely to solvent firms against good collateral at penalty rates.b. Fed allowed the money supply to fall by one-fourth, which likely caused the deflation in the early 1930s.c. Fiscal policy was tightened to pursue a balanced budget.d. The U.S. government did not abandon the gold standard until 1933 (the gold standard constrains the monetary policy).e. All of the above are thought to be the policy…
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Legislation proposes that the government should use macroeconomic policy to achieve an unemployment rate of zero percent, by increasing aggregate demand for as much and as long as necessary to accomplish this goal. From a neoclassical perspective, how will this policy affect output and the price level in the short run and in the long run? Sketch an aggregate demand/aggregate supply diagram to illustrate your answer.
what is the meaning of ripple effects and how does it affect an economy?
Briefly discuss the key difference(s) between Keynesian Economics and Neoclassical Economics.
please answer the following question: 1. Suppose that the economy has an inflationary gap. Which of the following policies would most likely help the situation?(Select All that Apply)A. Reductions in agricultural subsidies and veterans' benefits.B. Postponement of a highway construction program.C. Reductions in Federal tax rates on personal and corporate income.D. Increase in Federal tax rates on personal income.E. Provide American household with direct relief during a pandemic.F. Provide small businesses with funds to pay payroll.
8. Agreement and disagreement among economists Suppose that Larry, an economist from a college in Pennsylvania, and Megan, another economist from an investigative reporting group, are both guests on a popular science podcast. The host of the podcast is facilitating their debate over budget deficits. The following dialogue represents a portion of the transcript of their discussion: Megan: Most people recognize that the budget deficit has been rising considerably over the last century. We need to find the best course of action to remedy this situation. Larry: I believe that a cut in income tax rates would boost economic growth and raise tax revenue enough to reduce budget deficits.. Megan: I actually feel that raising the top income tax rate would reduce the budget deficit more effectively. The disagreement between these economists is most likely due to differences between perception versus reality Despite their differences, with which proposition are two economists chosen at random most…
Evaluate the validity of the following claim and justify your answer: “The First Welfare Theorem formally shows that macroeconomic policy is often useless.”
41) Which of the following is a tool for achieving macroeconomic objectives? A) Fiscal policy B) Monetary policy C) Incomes policy D) All of the above 42) Macroeconomics is useful: A) only to governments B) only to business firms seeking to maximize their profits C) only to households seeking employment D) to all economic decision-making units 43) Consider a circular flow model with households, firms, and government. Which of the following is true? A) Households sell labour services and other resources to firms B) Households purchase resources from firms and convert them into goods and services C) The government does not purchase anything from households D) Households receive income from firms but not from the government 44) Payments such as employment insurance and welfare are called: A) employment income B) transfer payments C) compensation income D) business income 45) When households purchase government bonds, they: A) lend to the…
1) If the government wants to reduce unemployment what are some ways it should change spending and taxes?2) Define net taxes.3) Define the budget deficit.4) Assume the following behavioral equations for a macroeconomy:C = 100 + 0.9Yd, I = 50, T = 100 and G = 40. Calculate the equilibrium level of output.5) In a closed economy with a public sector prove that S + T = I + G.6) Suppose that the MPS = 0.2 and the government is interested in raising the level of output in the economy by$100 billion. Calculate how much the government would have to spend to achieve this objective.7) Define the tax multiplier and give the algebraic expression.8) Assume that the government spending multiplier is equal to 4. Calculate the tax multiplier from thisinformation.9) Calculate how much output would expand by if the government increased spending by $500 billion and financedthis spending by increasing lump-sum taxes by the same amount.10)Given the above model for an economyC = 100 + 0.8YdG = 800T = 500I =…

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