December 2020

Why do people hold money? How will an increase in the interest rate influence the amount of money that people will want to hold? How would each of the following influence the quantity of money you would want to hold? a. an increase in the interest rate earned on checking deposits b. an increase in […]

If the Fed wants to expand the money supply, why is it more likely to do so by purchasing bonds and other financial assets rather than by lowering reserve requirements? Are the following statements true or false? a. “You can never have too much money.” b. “When you deposit currency in a commercial bank, cash

Why do people hold money? How will an increase in the interest rate influence the amount of money that people will want to hold? How would each of the following influence the quantity of money you would want to hold? a. an increase in the interest rate earned on checking deposits b. an increase in

Historically, shifts toward a more expansionary monetary policy have often been associated with increases in real output. Is this surprising? Why or why not? Can an expansion in the money supply increase real output and employment? Why or why not?

“Without aid from industrial nations, poor countries are caught in a poverty trap. Because they are poor, they are unable to save and invest; and, lacking investment, they remain poor.” Evaluate this view. What happened to economic growth between 1000 and 1800? How did the situation change after 1800? Why were these two periods so

“Regulatory policies that restrict trade and voluntary agreements between parties will retard economic progress.” Indicate why you either agree or disagree with this statement. What must an entrepreneur do in order to introduce a new innovative product? What determines whether the new product will be a success or failure? How important is innovation as a

“Because government-operated firms do not have to make a profit, they can usually produce at a lower cost and charge a lower price than privately owned enterprises.” Evaluate this view. How does money of stable value influence the volume of trade? When the inflation rate is volatile, how is the volume of trade affected? How

What impact do natural resources have on economic growth? Will it be possible for a country with few natural resources to grow rapidly? Why or why not? Why did Thomas Malthus believe that per person income could never rise much above the subsistence level? Given the era of his writings, was Malthus’s view on this

When the government is heavily involved in the regulation of markets, how will this influence the gains from trade? How will it influence the degree of rent-seeking by business and labor groups and the campaign contributions available to politicians?

Name five countries with a high income per capita. Why do you think the income is so high in these countries? How many of your high-income countries also ranked among the fastest-growing countries in the world since 1990?