HW Solutions Chapter 9

HW Solutions Chapter 9 - falls, the incentive for savings...

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PROBLEM SET 1. Two time spans during which the U.S. economy was enjoying an expansion but not a boom were from 1975 to 1980 and from 1980 until 1981. 2. In the classical model, a decrease in investment spending could not cause a recession because any decrease in investment spending would lead to the decrease in the demand for loanable funds, which in turn would lead to lower interest rates. As the interest rate
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Unformatted text preview: falls, the incentive for savings decreases, so households save less, and, necessarily, spend more, perfectly offsetting the decrease in investment spending. 3. According to Table 1, the recessions of 1974, 1980, the late 1980s, and 1990 were associated with increases in oil prices. But there were many other recessions for which changes in oil prices were unimportant....
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This homework help was uploaded on 04/22/2008 for the course ECON 203 taught by Professor Tang during the Spring '08 term at Ole Miss.

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