Macro Economics

TOPIC 1: How does the aggregate goods and services market differ from the regular (microeconomic) supply and demand market that was presented in session 2? In other words, how does aggregate demand and aggregate demand differ from normal supply and demand? Address the measures of price, quantity, and the demand and supply curves.

TOPIC 2: Visit the Board of Governors of the Federal Reserve website and read the latest Federal Open Market Committee (FOMC) statement which discusses the current type of monetary policy which the Federal Reserve is implementing:

http://www.federalreserve.gov/monetarypolicy/default.htm

Is the Federal Reserve implementing expansionary or contractionary monetary policy? Why?

How do you think that the Federal Reserve’s changes to monetary policy will impact the condition of the U.S. economy? Why?

Topic 3:Congress did not substantially change Federal income tax rates between 1993 and 2000. Visit the Bureau of Economic Analysis Web site, www.bea.gov. You can find Table 3.2 on the Federal government’s current receipts and expenditures at:

http://www.bea.gov/iTable/iTable.cfm?ReqID=9&step=1

By selecting the “Options” icon, you can select the time period of 1993-2000.

Find the annual revenues from the Federal income tax from 1993 to 2000. What happened to those revenues over those years? Given constant tax rates, what do the changes in tax revenues suggest about changes in the shape of the Laffer Curve? If lower (or higher) tax rates do not explain the changes in tax revenues, what do you think does?

Topc 4:Select one of the following schools of economic thought: Keynesian, Chicago, and Austrian. Identify three keys points or beliefs that are held by that particular school. What are the macroeconomic policy implications of those beliefs? Explain your answer. Which school of economic thought do you find to be most convincing? Why?

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