Questions from General Economics

Q: Explain how credibility might affect the cost of reducing inflation.

Explain how credibility might affect the cost of reducing inflation.

Q: Explain two ways in which a government budget deficit hurts a future

Explain two ways in which a government budget deficit hurts a future worker.

Q: What are two situations in which most economists view a budget deficit

What are two situations in which most economists view a budget deficit as justifiable?

Q: What causes the lags in the effect of monetary and fiscal policy

What causes the lags in the effect of monetary and fiscal policy on aggregate demand? What are the implications of these lags for the debate over active versus passive policy?

Q: According to traditional Keynesian analysis, why does a tax cut have

According to traditional Keynesian analysis, why does a tax cut have a smaller effect on GDP than a similarly sized increase in government spending? Why might the opposite be the case?

Q: Can an increase in the price of cheese possibly induce a consumer

Can an increase in the price of cheese possibly induce a consumer to buy more cheese? Explain.

Q: This chapter uses the analogy of a “leaky bucket” to

This chapter uses the analogy of a “leaky bucket” to explain one constraint on the redistribution of income. a. What elements of the U.S. system for redistributing income create the leaks in the bucke...

Q: A consumer has income of $3,000. Wine costs

A consumer has income of $3,000. Wine costs $3 per glass, and cheese costs $6 per pound. Draw the consumer’s budget constraint with wine on the vertical axis. What is the slope of this budget constrai...

Q: When Alan Greenspan (who would later become chairman of the Federal

When Alan Greenspan (who would later become chairman of the Federal Reserve) ran an economic consulting firm in the 1960s, he primarily hired female economists. He once told the New York Times, “I alw...

Q: A case study in the chapter describes a phone conversation between the

A case study in the chapter describes a phone conversation between the presidents of American Airlines and Braniff Airways. Let’s analyze the game between the two companies. Suppose that each company...