govern of of thu o of value b If else income and the level o

govern of of thu o of value b. If else income and the level of both multiplier. original equilibrium, i (Tp) c. with government expenditure ort so government budget remains balanced, does the Explain your of income nd answer. 3. Go to the Web site of the Conference Board org) and find the latest release of the Consumer Index. How has the index since its last release? What is the expected impact of this change on the economy the Wall Street Journal 4. A number of articles in reported that the strong dollar, combined with the recession of 2001, forced many U.S. manu- facturers to develop better methods to produce and sell their products. Use the discussion of the macro model in this chapter to explain why busi- nesses would have implemented such changes in strategies. 5. What were the key provisions of the American Recovery and Reinvestment Act passed by Congress in February 2009? How has the impact of the Act been evaluated?

Solution

3, Conference board Consumer confidence index has moved up to 98.1 in January from 96.3 in December. The index has improved since the last release. An upward movement suggests that the consumers are optimistic about their economic conditions such as jobs and salaries and are likely to spend more . The overall impact of a rise on the economy is positive. A rising trend in consumer confidence indicates improvements in consumer buying patterns. Manufacturers can increase production and hiring. Banks can expect increased demand for credit. Builders can prepare for a rise in home construction and government can anticipate improved tax revenues based on the increase in consumer spending. However, a less than 5% change is considered inconsequential . A change from 96.3 to 98.1 is less than 5% and is not likely yo have a major impact on the economy.

4. The american manufacturers responded to the 2001 recession by

5. The ARRA had a total of $789 billion stimulus including $275 billion in tax cuts and $514 billion in new spending.

Key provisons of the ARRA were

It included $170 billion for infrastructure projects such as highways, internet broadband and public-housing repairs. Of that, about $40 billion will go to the Energy Department.

There will be $275 billion in tax cuts, including a $800 cash rebate to most families that will be spread out over a year, and an extra $250 quick payment to every person over age 65. The spending provisions cover a very wide variety of projects.

Responding to public outrage against bankers who paid themselves billions of dollars in bonuses while their banks were collapsing and investors losing 95% of their money, the bill imposes tight restrictions on executive bonuses at financial institutions.

The ARRA helped to raise gross GDP in the following years. It lowered the unemployment rate .. It increased the number of people employed. It increased the number of full time equivalent jobs. Although impact of ARRA peaked in 2010. However impacts could be thereafter as well .