What occurs if expected inflation is higher than actual inflation?
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A higher rate of inflation than expected lowers the realized real real
interest rate below the contracted real interest rate.
How do taxes affect prices, quantities, and surpluses?
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A tax causes consumer surplus and producer surplus (profit) to fall
How do special interest groups affect economic policies?
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Interest groups are a potential source of information for voters and
policymakers alike. The groups can advise the voters about the wisdom of
different candidates' positions and can advise the policymakers about what
policy approaches would be desirable.
What is the Ricardian Equivalence?
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idea that people save all of their tax cut in order to pay for an expected
future tax increases as a tax cut today means higher future taxes
Explain the variables in the Quantity Theory of Money. What happens when two of
those variables are held constant?
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According to the quantity theory of money, the general price level of
goods and services is proportional to the money supply in an economy—
assuming the level of real output is constant, and the velocity of money is
constant.
Why does supply slope up?
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, At higher prices, suppliers can profitably produce using more expensive
techniques and inputs
What will happen to interest rates if the demand for loanable funds decreases?
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Real interest rates would decrease
What can the government do to try to fight a recession?
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The prime actions of a government on fighting against recession should be
focused on increasing money circulation, containing inflation, boosting per
capita disposable income, reducing per capita debt level, balancing
interest rates, ensuring an atmosphere conducive to business activities and
any other supporting measures for these causes.
If the Fed wants to increase the money supply, what would typically happen?
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It buys government bonds
What monetary policy philosophy is against tying the hands of the central bank?
Give this one a try later!
A higher rate of inflation than expected lowers the realized real real
interest rate below the contracted real interest rate.
How do taxes affect prices, quantities, and surpluses?
Give this one a try later!
A tax causes consumer surplus and producer surplus (profit) to fall
How do special interest groups affect economic policies?
,Give this one a try later!
Interest groups are a potential source of information for voters and
policymakers alike. The groups can advise the voters about the wisdom of
different candidates' positions and can advise the policymakers about what
policy approaches would be desirable.
What is the Ricardian Equivalence?
Give this one a try later!
idea that people save all of their tax cut in order to pay for an expected
future tax increases as a tax cut today means higher future taxes
Explain the variables in the Quantity Theory of Money. What happens when two of
those variables are held constant?
Give this one a try later!
According to the quantity theory of money, the general price level of
goods and services is proportional to the money supply in an economy—
assuming the level of real output is constant, and the velocity of money is
constant.
Why does supply slope up?
Give this one a try later!
, At higher prices, suppliers can profitably produce using more expensive
techniques and inputs
What will happen to interest rates if the demand for loanable funds decreases?
Give this one a try later!
Real interest rates would decrease
What can the government do to try to fight a recession?
Give this one a try later!
The prime actions of a government on fighting against recession should be
focused on increasing money circulation, containing inflation, boosting per
capita disposable income, reducing per capita debt level, balancing
interest rates, ensuring an atmosphere conducive to business activities and
any other supporting measures for these causes.
If the Fed wants to increase the money supply, what would typically happen?
Give this one a try later!
It buys government bonds
What monetary policy philosophy is against tying the hands of the central bank?
