1) How would each of the following events affect the level of employment and the
real wage rate?
(a) A major government loan-guarantee program goes bust, losing $500 billion. To
pay off the loss, the government announces that tax rates will rise 30%
1) The three approaches to measuring economic activity are the
A) cost, income, and expenditure approaches.
B) product, income, and expenditure approaches.
C) consumer, business, and government approaches.
D) private, public, and international approa
1) Money demand in an economy in which no interest is paid on money is
MD / P = 500 + 0.2 Y 1000 i
Suppose that P = 100, Y = 1000, and i = 0.10. Find real money demand, nominal money
demand, and velocity.
The price level doubles from P = 100
1) The tax code changes so that business firms face higher tax rates on their
a. How does this change affect the desired capital stock? Explain.
b. Using a saving-investment diagram, analyze the effects on the equilibrium
real interest rate,