Should governments be involved in managing economy and economic development? Does government spending create jobs and expand economy? Why or why not?

Discuss how fiscal and monetary policies affect aggregate demand, spending and output, prices, and employment.

Macroeconomics | Minimum of 100 words

According to the Lucas critique, what is the proper way to evaluate a proposal that reduces government borrowing by raising taxes and reducing government spending?

If you felt it was necessary to implement contractionary fiscal policy, would you choose to increase taxes or decrease government spending? Why?

1. Let’s say the AD/AS equilibrium is at full employment, and then the aggregate demand curve moves to the left: (all answers “up” or “down”; and assume prices are not sticky)
2. What happens to the amount of U.S. imports and exports when prices in the U.S. go up.
3. List and explain two of the reasons that investment spending is so much more volatile than consumption spending.
4. Let’s say the AD/AS equilibrium is at full employment, and then the aggregate demand curve moves to the left: (all answers “up” or “down”; and assume prices are not sticky)

5. Output goes:

   Prices go:  

   Unemployment goes:

1. In your own words, define the multiplier effect. Why does this mean a small decrease in consumer spending during a recession could be more harmful? Why does this mean a small increase in government spending could be so beneficial?

2. Define stagflation. Why was Keynesian economics not equipped to address this in the 1970s?

3. Was Keynesian theory useful to combat the 2008 global financial crisis? Why or why not?

4. Overall, do you think Keynesian economics can help create economic stability? What is one major downside to this approach?

Please be advised this was the information provided to me for a "hypothetical economy"

Please see below the spending information pertaining to the participants of a hypothetical economy.

C = $10 + 0.8Y               

I = $20                

G = $30               

X-M = $10

1. State the name of the economic agent/participant that each equation above would apply to.
2. State the assumptions underlying the equations for C and I. Why do we make these assumptions?
3. Draw a graph to illustrate the desired aggregate expenditures of an economy whose participants have the spending plans provided above.
4. Calculate the value of equilibrium output.

1.  Read pages 1-9 and 17-19 of Van de Water’s paper posted in the Deficits tab of D2L for the course entitled “Federal Spending and Revenues will Need to Grow in Coming Years, Not Shrink,” and answer the following questions.

A.How has the composition of Federal Spending as Percentage of GDP changed since 1976? Why?  What are the current big ticket items?

B.Why are costs for Social Security, Medicare, and Medicaid increasing?

C.What are our options for reducing the growth rate of Social Security?  What would you choose to do?  

In Macro Model #3 with government spending and taxation, suppose that the household consumption function is given by C Y = + 100 .75 , desired investment and government spending by 100 each, and taxes by T T tY = +0 . Derive and graph aggregate expenditure for this economy as a function of constant taxes 0 T > 0 and the fractional income tax rate t >0. Use this aggregate expenditure function to find equilibrium real GDP for the case that 0 T = 80 and the income tax rate is t = .2 . What is the value of the income multiplier in this case?

According to a recent survey conducted at a local college, we found students spend an average of 19.5 hours on their smartphone per week, with a standard deviation of 3.5 hours. Assuming the data follows the normal distribution.

a) How many percent of students in this college spend more than 15 hours on their smartphone per week?

b) If we randomly select 12 students, what is the probability that the average of these students spending on the internet is more than 20 hours per week?

c) What is the 36th percentile for number of hours spending on their smartphone per week?