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CHAPTER 15: TEST BANK
CHAPTER 15: TEST BANK

... income. Another problem with not counting the value of homemaking services is that comparisons become distorted. For example, in the 1950s, many homemakers cared for their homes and families by themselves, without paying for additional help. In the 1980s and 1990s, many women work outside their home ...
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... An increase in government expenditures → would raise interest rates, → leading to an inflow of foreign capital (loans), → appreciating the currency (higher Y/$), → lowering net exports, → which cancels out the expansionary effect of higher Gov’t spending → leaving the economy at the same level of ou ...
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... Results at the macro and micro levels reveal that although the impact of the crisis was not as large as initially expected, it has affected some specific sectors in the economy and in varying degrees. For instance, workers in the manufacturing sector are most likely to be displaced or could experien ...
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... 6) Plot the AE equations from questions 1 and 6 below. Explain how we went from the initial equilibrium to the latter one. How much of the change in real GDP (Y) was due directly to the change in government spending and how much was the result of induced or income dependent consumption. Calculate t ...
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... hand requires only that the interest rate adjust to whatever the levels of supply and demand for money happen to be. The interest rate is determined in the bond market, where bond prices (and thus interest rates) are determined moment to moment by bond traders. So the interest rate, and thus the mon ...
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... these years or in the long run, since in this module only interest rates can affect investment. Since there was no change in the interest rate, there is no change in investment. In the third year production rose by 90% of the previous rise in GDP. This represents the increased consumer demand now ex ...
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Pensions crisis

The pensions crisis is a predicted difficulty in paying for corporate, state, and federal pensions in the United States and Europe, due to a difference between pension obligations and the resources set aside to fund them. Shifting demographics are causing a lower ratio of workers per retiree; contributing factors include retirees living longer (increasing the relative number of retirees), and lower birth rates (decreasing the relative number of workers, especially relative to the Post-WW2 Baby Boom). There is significant debate regarding the magnitude and importance of the problem, as well as the solutions.For example, as of 2008, the estimates for the underfunding of U.S. states' pension programs range from $1 trillion using the discount rate of 8% to $3.23 trillion using U.S. Treasury bond yields as the discount rate. The present value of unfunded obligations under Social Security as of August 2010 was approximately $5.4 trillion. In other words, this amount would have to be set aside today such that the principal and interest would cover the program's shortfall between tax revenues and payouts over the next 75 years.Some economists question the concept of funding, and, therefore underfunding. Storing funds by governments, in the form of fiat currencies, is the functional equivalent of storing a collection of their own IOUs. They will be equally inflationary to newly written ones when they do come to be used.Reform ideas are in three primary categories: a) Addressing the worker-retiree ratio, via raising the retirement age, employment policy and immigration policy; b) Reducing obligations via shifting from defined benefit to defined contribution pension types and reducing future payment amounts (by, for example, adjusting the formula that determines the level of benefits); and c) Increasing resources to fund pensions via increasing contribution rates and raising taxes.
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