solution quiz 1

solution quiz 1 - Solutio quiz 1 Q1 The Four Most Important...

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Solutio quiz 1 Q1. The Four Most Important Lessons of Macro Economics In the Long run, a country’s capacity to produce goods and services determines the standard of living of its citizens. In the Short run, aggregate demand influences the amount of goods and services that a country produces. In the Long run, the rate of money growth determines the rate of inflation, but it does not affect the rate of unemployment. In the Short run , the policy makers who control monetary and fiscal policy face a tradeoff between inflation and unemployment. The Four Most Important Unresolved Questions of Macroeconomics How should policymakers try to promote growth in the economy’s natural level of output? Should policymakers try to stabilize the economy? How costly is inflation, and how costly is reducing inflation? How big a problem are government budget deficits? Q2. In the two-period Fisher model, suppose Bill earns $100 in the first period and $200 in the second period. a. If Bill consumes $140 in the first period and $150 in the second period, what is the interest rate? b. Now if Bill's consumption changes to $150 in the first period and $140 in the second
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solution quiz 1 - Solutio quiz 1 Q1 The Four Most Important...

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