Blog

Figure 2. On the graph, MS represents the money supply and MD represents money demand. The usual quantities are measured along the axes.   Refer to figure 2. If the relevant money-supply curve is the one labeled MS1, then the equilibrium price level is

Suppose each good costs $5 per unit and Miranda holds $40. What is the real value of the money she holds?

Crowding out occurs when investment declines because

Hailey deposits money into an account with a nominal interest rate of 5 percent. She expects inflation to be 2 percent. The tax rate is 30 percent. Hailey’s after-tax real rate of interest

On behalf of her firm, Sophie frequently travels to France. She notices that the cost of a cup of coffee in France, when converted to U.S. dollars, is the same as the cost of a cup of coffee in the United States. This is

Figure 3: The AD-SRAS-LRAS diagram Refer to figure 3. If the economy is at C and there is a rise in aggregate demand, in the short run the economy

Table 1      Refer to table 1. If you are a risk-lover investor, which stock should you buy based on the market capitalization criterion alone?

Tristan decides to purchase bonds issued by India instead of ones issued by the Brazil even though the Indian bonds have a higher risk of default. An economic reason for his decision might be that

Scenario 2 In October 2013, President Obama and the Republican Party faced a debate regarding tax increases and government spending cuts (the so-called government shutdown). A temporary solution was reached until February 2014, when the debate started again.   Refer to scenario 2. Suppose that President Obama and the Republican Party did not reach an agreement. Hence, taxes increase and government expenditure fell in February 2014. Within the framework of the AD-SRAS-LRAS model discussed in class, what would happen with prices and output in the U.S. economy if it initially starts in a situation of long-run equilibrium?

Tristan decides to purchase bonds issued by Brazil instead of ones issued by the United States even though the Brazilian bonds have a higher risk of default. An economic reason for his decision might be that