Macro Ch7 Online Questions

Macro Ch7 Online Questions - Chapter 7 Review Questions 1....

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Chapter 7 Review Questions 1. Discuss the critical assumption on which the classical model is based. How does it relate to the length of time over which we are analyzing the economy? 2. Describe how, in the classical model, the economy reaches full employment automatically. Is this a “realistic” depiction of how the economy behaves? 3. Why does the classical model treat technology and the capital stock as constant? 4. Explain why the slope of the aggregate production function diminishes as more labor is employed. 5. “According to Say’s law, all markets always clear.” True or false? Explain. 6. What is the difference between net taxes and total tax revenue? Why is the distinction important? 7. Who are the two major groups on the demand side of the loanable funds market? Why does each seek funds there? What is the “price” of these funds? 8. What is the source of funds supplied to the loanable funds market? 9. Explain why the supply of funds curve slopes upward, and why the curve depicting business demand for funds slopes downward. 10. How will the
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This note was uploaded on 11/07/2010 for the course ECON 0001 taught by Professor Kitsikopoulos during the Spring '08 term at NYU.

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Macro Ch7 Online Questions - Chapter 7 Review Questions 1....

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