Discuss Expansionary monetary policy and expansionary fiscal policy- Microeconomics

Discuss Expansionary monetary policy and expansionary fiscal policy- Microeconomics

1. Please explain the concept of “The Tragedy of Commons”. What happens to the resources that are commonly held by everybody? What other example, besides public pastures, is used to explain “The Tragedy of Commons”?

2. Please explain each of the different measures of unemployment and their causes:

a. Frictional Unemployment

b. Structural Unemployment

c. Cyclical Unemployment

3. Please define the following measures of unemployment used by the BLS. In Addition, please provide the statistic for June 2015 for each measure.

a. U1

b. U2

c. U3

d. U4

e. U5

f. U6

4. Why do some people believe that the current measure of unemployment is inaccurate?

5. What are the four sectors in the Circular Flow of Economic Activity Diagram? What does the government, households, and firms sell (this can mean provide) and buy (this can mean provide) in each sector? How does the government finance itself in excess of taxes?

6. Jim, Cathy, and Roger each has the following demand for candy. Jim, Cathy and Roger make up the total market of people who want to buy candy.

Jim

Cathy

Roger

Price

Quantity Demanded

Price

Quantity Demanded

Price

Quantity Demanded

$1.00

14

$1.00

8

$1.00

11

$2.00

12

$2.00

7

$2.00

10

$3.00

10

$3.00

6

$3.00

9

$4.00

8

$4.00

5

$4.00

8

$5.00

6

$5.00

4

$5.00

7

$6.00

4

$6.00

3

$6.00

6

$7.00

2

$7.00

2

$7.00

5

a.) Please construct the market demand curve and draw the demand curve?

Market Demand Curve

Price

Total Quantity Demanded

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

7. Now suppose that Nestle, Smuckers, and Toll House all want to sell candy to Jim, Cathy, and Roger. Each individual company’s supply curve is shown in the tables below.

Smuckers

Nestle

Toll House

Price

Quantity Supplied

Price

Quantity Supplied

Price

Quantity Supplied

$1.00

0

$1.00

3

$1.00

0

$2.00

2

$2.00

4

$2.00

3

$3.00

4

$3.00

5

$3.00

6

$4.00

6

$4.00

6

$4.00

9

$5.00

8

$5.00

7

$5.00

12

$6.00

10

$6.00

8

$6.00

15

$7.00

12

$7.00

9

$7.00

18

b.) Please construct the market supply curve and draw the market supply curve?

Supply Curve

Price

Total Quantity Supplied

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

8. What is the equilibrium quantity demanded and supplied? What is the equilibrium price? How much do Jim, Cathy, and Roger each buy? How much do Smuckers, Nestle and Toll House each sell?

9. Please explain the concept of Demand-pull inflation? How does Demand-pull inflation persist? What can Demand-pull inflation become if the government finances its spending by printing money?

10. Please explain the concept of Cost-push inflation? What is the brighter side of Cost-push inflation? What would happen if the government responded in the wrong manner to this type of inflation? Have we ever faced this type of inflation as a nation?

11. For each question please provide a short answer:

a. What is the difference between expansionary monetary policy and expansionary fiscal policy? How does each operate on the economy

b. What is the difference between contractionary monetary policy and contractionary fiscal policy? How does each operate on the economy?

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