1 The financial sector has an important role in bringing together people with savings to invest, and companies or governments that need to borrow funds. Let’s assume there is $10 to invest. Which is more feasible to invest in a stock or a bond? What are the risks that are associated with investing it in stocks versus bonds?
2. Confidence- The NPR podcast describes some banks’ recent manipulation of the LIBOR interest rate. Confidence is crucial for our banking system to function effectively. How would uncertainty about banks’ behavior affect decisions to invest in stocks and bonds? What is the role for banking regulation?
3 What Role for Government? List and explain two ways that there is a need for an effective government role in an economy. Explain how this government role does, or does not, solve a market failure such as an externality.
4 Free Trade – Pro or Con? After reading the Heritage Foundation’s guide for policy-makers, give one example of benefitts from free trade. Is there any way in which free trade has caused hurt by free trade, but that this article does not address?
5-Define economic growth. Use the rule of 72 to determine the number of years required for an amount to double. Define total factor productivity (TFP) AND GIVE EXAMPLES TO JUSTIFY YOUR UNDERSTANDING OF THE CONCEPTS
6-a) Define the GDP and explain how GDP is different from the Gross National Product (GNP)
b) Explain the difference between Real GDP and Nominal GDP.
7 Please answer the following questions about monetary policy and fiscal policy:
a) Define monetary policy and fiscal policy. Be sure to discuss who controls monetary policy and who controls fiscal policy.
b) How does fiscal policy influence aggregate demand?
8-Please answer the following questions on unemployment:
a) Define the unemployment rate.
b) Identify the three types of unemployment
9-Please answer the following questions on inflation:
a) Define inflation and explain one of the ways by which inflation is measured.
b) In what ways does inflation impose costs on the economy?
10-Please answer the following questions on money and the money supply:
a) What are the four functions of money? Please define each of the four functions.
b) What is the main difference between the M1 and M2 definitions of the money supply