What other economic outcomes (besides GDP, unemployment, inflation and budget surplus) are important measures of macroeconomic success? What policy decisions are make to achieve these goals (these may be different that the four given - interest rates, income tax rates, corporate tax rates and government spending)?

You are given the following information for 1994: Sales = $50,000, CoG’s = $15,000, Depreciation = $5000, tax rate = 40%, Net Capital Spending = $15,000, Additions to Net Working Capital = $5000. Calculate EBIT, OCF, and CFA. Do you have to be worried if the CFA is negative? Explain.

One activity historically undertaken by local government tourism organizations is that of marketing. In established and popular destinations, should spending on marketing and promotion now be left in the hands of the private sector, which are the businesses that gain from tourism spend. Discuss

Simple discussion, about 200-400 words

• Discuss how changes in the Federal Reserve’s monetary policy affect at least 1 of the 4 components of GDP (consumption, investment, government spending, net exports).
• Have the Federal Reserve’s countercyclical monetary policies been effective in moderating business cycle swings? Justify your response.

(You will receive more credit for being “quantitative” with your answers, not just “qualitative”):

The role of government in the U.S. economy has grown over time. Provide some evidence of this fact. Also, the composition of government spending has changed over time. Provide some evidence of this fact.

AD AS problem

6) Government increases its spending and reduces personal income tax rates (assume no

crowding out). The economy is far from potential (recession). (Use the neoclassical

synthesis)

7) The economy experiences a significant increase in production technology (show a

classical model (LRAS))

1. Describe the ‘crowding out’ perspective on fiscal policy in your own words. In your opinion, what are the strengths and weaknesses of this argument?
2. Why might government spending create a larger multiplier effect when unemployment is high and have a smaller multiplier effect when the economy is at full employment?

Show what happens to interest rate, output, prices and wages as

i. Government spending decreases within a general equilibrium framework

ii. Money Supply decreases within a general equilibrium framework

iii. Autonomous consumption (or autonomous investment) decreases within a general equilibrium framework

1. Three market structures: perfect competition, monopoly, and monopolistic competition.
– In each of these, would you expect to see firms spending money to advertise their products?
Why or why not?

2. Is advertising good or bad from society’s viewpoint? Try to think of at least one “pro” and “con.

Define capital stock. Use the aggregate demand and supply model to show the effects of a decrease in interest rates in the short run and in the long run. Explain why each curve shifts. Also explain why an increase in consumer spending would not have the same effect in the long run.