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Q1. Why do proponents of active policy recommend government intervention to close an expansionary gap? Briefly discuss.
Q2. Why might an active policy approach be more politically popular than a passive approach, especially during a recession?
Q3. Some economists argue that only unanticipated increases in the money supply can affect real GDP. Explain why this may be the case.
Q4. What is the policy credibility and how is it relevant to the problem of reducing high inflation? How is credibility related to the time inconsistency problem?
Calculate price, quantity and social surplus for the initial state and each policy.
What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution
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The law of demand states that other things equal
Examine the key factors affecting the demand for and the supply of a good or service
How can two countries both be better off as a result of trade? How can tariffs protect U.S. jobs? Do tariffs lead to a net increase in jobs?
Compare the rationale of the Reagan administration for the 1981 tax reductions with the rationale behind the Kennedy-Johnson tax cut of 1964
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Suppose that the only input used in the generation of solar energy is sunlight
What is the opportunity cost of Josephine's trip to the wedding
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