Essay Questions and Problems

Do you believe yourself to be more a classical or a Keynesian economist? Explain why.

Explain the workings of multipliers in the macro-economy.

If Y = C + I + G, and

C = 400 + 3/4(Yd)

Yd = Y - T

T = 800

I = 1200

G = 600

a. At what income level would the economy find equilibrium?

b. Measure the spending multiplier.

c. Could the government raise aggregate income to 8000? How?

d. Graph

Describe the workings of the money multiplier, especially how the reserve requirement is important; and how central banks can change money supplies.

Outline your own course in Macroeconomics. What is the most important topic in your course? Explain Why.

Graph, label, and briefly explain the following graphs:

a. Laffer Curve

b. Phillips Curve

Draw a circular flow diagram that includes at least three components of demand, a government sector, and a financial sector. Label as many sectors and flows as you can.

Graph--and explain briefly--what happens to a labor market during a recession and a typically classical recovery.

Do you believe yourself to be more a classical or a Keynesian economist? Explain why.

If Y = C + I + G + X - M, and

C = 400 + 3/4(Yd)

Yd = Y - T

T = 800

I = 1200

G = 600

a. At what income level would the economy find equilibrium?

b. Measure the spending multiplier.

c. Could the government raise aggregate income to 8000? How?

If Y = C + I + G + X - M, and

C = 400 + 3/4(Yd)

Yd = Y - T

T = 800

I = 1200

G = 600

a. At what income level would the economy find equilibrium?

b. Measure the spending multiplier.

c. Could the government raise aggregate income to 8000? How?

How does the Philips Curve support Keynesian economic theory?

How might adaptive expectations work to encourage inflation and unemployment in response to a expansionary money policy?

What is Crowding Out?

What is the Philips Curve?

Explain the difference between adaptive and rational expectations.

Explain the money multiplier.

Explain the investment accelerator.

A government introduces "supply side" policies, in order to have a flexible work force. Describe the policies which might be introduced. Consider whether such policies would be worthwhile.

"The days are gone when government can spend their way out of unemployment. " To what extent do you agree with the above statement? Explain your reasoning.

If Y = C + I + G, and

C = 2000 + 1/2(Yd)

Yd = Y - T

T = 4000

I = 6000

G = 3000

a. At what income level would the economy find equilibrium?

b. Measure the spending multiplier.

c. Could the government raise aggregate income to 20000? How?

d. Would an income tax make fiscal policy more or less effective? Show.

Do you believe that monetary policy could be effective in stimulating long term economic growth? Think of the couuntry you are most familiar with (probably Norway, the US or Britain) and relate your answer to that country's economy . With what type of economics--monetarism, Keynesian, or Neo-classical-- are your views most consistent?