Homework+4 (1)

Homework+4 (1) - marginal propensity to save and the...

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Problem Set 4: Home Work Assignment READ ALL INSTRUCTIONS CAREFULLY! All work must be submitted by the due date. You will receive NO credit if homework is turned in after the deadline. Full credit will be given for accurate, complete and neat work. Please save your work as a word document or type right into the assignment window in oncourse. Please rewrite the question and provide the answer below it. Points will be deducted if instructions are not followed. Read Chapters 12, 13 and 17 of the text book and answer the following questions: All questions worth 2 points each 1. Suppose equilibrium GDP is less than full-employment output and the economy is in a recession. What are the appropriate fiscal policies that would take the economy to full employment level? (1 point) 2. Suppose equilibrium GDP is less than full-employment output and the economy is in a recession. What are the appropriate monetary policies that would take the economy to full employment level? (1 point) 3. What is the relationship between marginal propensity to consume,
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Unformatted text preview: marginal propensity to save and the multiplier? (1 point) 4. What is the difference between the discount rate and the minimum reserve ratio? (1 point) 5. Suppose that the Fed increases excess reserves in the banking system by $5 billion by buying $5 billion worth of bonds. If the reserve requirement is 20 percent, by how much can the money supply potentially increase? (1 point) 6. Give examples of contractionary fiscal and contractionary monetary policies? (1 point) 7. What is the meaning of absolute and comparative advantage? (1 point) Answer questions 8, 9 and 10 based on information provided below. Suppose US and Russia produce only two goods meat and potatoes in a weeks time according to the table below which shows their production possibilities. Meat Potatoes (lbs) (lbs) USA 2 4 Russia 5 20 8. Who has absolute advantage in each product? (1 point) 9. Who has comparative advantage in each product? (1 point) 10. What does each country export? (1 point)...
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This note was uploaded on 11/23/2010 for the course ECON 101 taught by Professor Staff during the Spring '08 term at IUPUI.

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Homework+4 (1) - marginal propensity to save and the...

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