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If the Federal Reserve does not take any offsetting action, what would happen to the supply of money if the general public decided to increase its holdings of currency and decrease its checking deposits by an equal amount? What is the federal funds interest rate? If the Fed wants to use open market operations to […]

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

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?

“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

“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

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

“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

Name five of the fastest-growing economies in the world since 1990.Why do you think these economies have grown so rapidly? “The rich countries are getting richer, while the poor are getting poorer.” Evaluate this statement.

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?