1. Why might definition be a problem for an economy?


  1. Why does the paradox of thrift suggest that government needs to intervene in a recession?


  1. What are five factors that cause the AD curve to shift.


  1. Assume that per capita income is growing at different rates in the following countries: Nepal, 1.1 percent: Kenya, 1.7 percent: Singapore, 7.2 percent: Egypt, 9 percent: How long will it take for each country to double its income per person?


  1. Calculate real growth per capita in the following countries:


  1. Democratic Republic of Congo population growth = 3.0 percent: real out put growth = -1.8 percent.
  2. Estonia: population growth = -0.4 percent: real output growth = 4.2 percent
  3. India: population growth = 2.0 percent: real output growth = 6 percent.
  4. United States: population growth = 0.5 percent: real output growth = 2.5 percent.


  1. Austrian economist Murray Rothbard has argued that government intervention during 1929 made what could have been a 1-year recession set off by the stock market crash into a 12-year depression. He believed that by creating confusing signals, government intervention kept investors from gaining knowledge of what investments to avoid .
    1. Is Rothbard’s explanation of the Depression consistent with the AS/AD model.
    2. If one agrees with Rothbardhow would one’s proposed policies to deal with recession differ from those presented .
  2. Capitalism was a derogatory term coined by Karl Marx to deride the riches of those who accumulated capital. He said that the accumulation of capital helps the rich get richer while simultaneously making the poor get poorer.


  1. Have the poor become poorer under capitalism?
  2. Based on the growth model presented in text what would you expect to happen to poor people income when society accumulates capital? (Austrian)
  1. Have the poor benefited more or less from economic growth than the rich?
  2. Go to the Bureau of Labor Statistics (BLS) and look up the recent changes in the consumer price index. Using that information, answer the following questions:

    a. Where do you think the economy is relative to potential?
    b. How does our answer to the above question determine what policy you would suggest the government should follow?

  3. Go to the Conference Board’s home page ( and read the press release of the consumer confidence index. Based on this release:

    a. What do you think will happen to the AD curve?
    b. How will this affect the price level and equilibrium output?P(5.u)

    Prime Essay Services , written from scratch, delivered on time, at affordable rates!