Briefly explain why a decrease in planned investment, which is a
change in the goods market,...
Briefly explain why a decrease in planned investment, which is a
change in the goods market, will alter the equilibrium in the money
market. (100 words maximum)
Explain briefly why the private market for public goods is
typically characterized by under-provision. Under what situations
will we expect the private market to overcome this problem (at
least partially)?
question 3.1
a) Briefly explain how a decrease in housing prices
would affect consumption and investment. You may assume that
consumers would like to maintain their target wealth. (word limit:
max 100 words)
You answer.
b) Given your answer to a), what is likely to happen
to GDP? Explain using a diagram.
You answer.
c) Given your answer to b), how can the government
use fiscal policy to prevent GDP from changing? Use a diagram in
your explanation.
You answer....
8. Draw the goods market. Illustrate and explain how the market
equilibrium would change under the following circumstances:
a. The U.S. dollar gained value compared to foreign
currencies.
b. American corporations have become leaner which means that
productivity in the U.S. has increased. Hint: How are prices in the
U.S. affected, relative to foreign prices?
c. There is a decrease in transfer payments (ie, items like
spending on social programs).
Which of the following will cause a decrease in market
price?
a.
A decrease in the number of sellers of the good
b.
A technological improvement in the production of the good
c.
An increase in the cost inputs for production of the good
d.
The imposition of a binding price floor in the market
Provide several reasons to explain why social change occurs.
Discuss the differences between planned and unplanned change. Why
are some people resistant to social change?
Explain and diagrammatically represent the change in Y (as shown
in the simple Keynesian goods-and-services market) as a result of
each of the following:
a. an increase in autonomous
money demand
b. a rise in autonomous
consumption
In both cases (a) and (b), explain the equilibrating process in
the goods-and-services market.