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    Misc. short answer macroeconomic questions

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    1. How do you assess the current condition of the economy? What are the strength and weaknesses? What policies do you regard as appropriate in directing economic performance going forward over the next four years? Please give a detailed answer.

    2. From an economic perspective, what do you believe are the two most urgent issues for the country (or economy) today? How would you address these issues in the short and long term?

    3. Over the last 4 years, several tax cuts have been implemented. Please discuss the potential benefits and costs of such fiscal policies, especially in a case in which spending is exclusively financed by government borrowing.

    4. The Federal Reserve Board applies monetary policy by affecting short-term interest rates. But changes in the Federal Funds Rate Target may not have an impact on long-term interest rates (for example mortgage rates) right away. Please explain why this may be the case.

    5. Finally, the AIDS epidemic has a drastic impact on countries in Africa. For a number of countries, the infection rate of the population has increased dramatically. What effect will this tragedy have on the economies of these countries? How should governments react and what economic policies should they implement?

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    Solution Preview

    1. The U.S. economy has grown steadily for many years. In many ways it is the envy of the world. While Europe faces serious demographic problems (and Japan's birthrate has plummeted catastrophically) ours has stabilized at levels that should sustain economic growth. I believe that our most serious issue relates to energy. Our dependency on foreign oil weakens us politically as well as economically. There are lots of great ideas on how we can become more independent in this area. However they are not likely to be implemented, given the facts outlined here:
    (Web sites are good for getting started on an assignment but you shouldn't reference them. If you need to reference materials for this paper, look in a peer-reviewed publication such as The Journal of Economic Literature or The Economic Journal.)
    One possibility not mentioned here is nuclear power. Many countries such as France use this for the majority of their energy. Many American scientists are pushing for it, given the threat of global warming, and new technology which makes them much safer. If the government invested in this technology, it could reduce our reliance on foreign oil, but probably not do away with it all together. A good article on all the different technologies that will need to be implemented in order to reduce ...

    Solution Summary

    Short answer questions. Current state of the economy, most urgent issues, monetary and fiscal policy. Effect of AIDS on Africa.