Economics Homework Assignment: Analysis of Economic Policies

This economics homework assignment covers a wide range of topics. It begins with microeconomic concepts such as elasticity of demand, market structures, and profit maximization. The assignment then delves into macroeconomic topics, including the definition and measurement of poverty, the impact of early childhood interventions, the calculation of real and nominal GDP, and the rule of 72. It also explores monetary policy, including the money supply, the roles of the Federal Reserve, and the difference between fiat and commodity money. Finally, the assignment examines different schools of economic thought, including Keynesian economics and Reaganomics, and analyzes the economic policies of Ronald Reagan. The assignment provides calculations, explanations, and analysis of various economic principles and historical events.

Week 7 Homework
(1) (5 points) Consider the following quote: “For many years, the hands-off fiscal
policies advocated by the classical economists held sway with the American
government. When times were hard, the prevailing response was to tough it
out, awaiting the ‘inevitable’ turnaround. The lessons of the Great
Depression and a booming wartime economy have since taught us, however,
that government intervention is sometimes necessary and desirable -- and
that to an extent, we can take charge of our own economic lives.” How
would you classify the speaker in terms of school of economic thought?
Answer: The speaker is belonged to the Keynesian school of thought.
According to him, waiting for elements for marketplace to run freely in
the economy can be longer. It finally fails to respond in the most
manners thus causing financial problem. The speaker advocated the
government interventions by the fiscal policy as well as monetary
policies to make correction in financial system.
(2) (5 points) In his 1982 Economic Report of the President, Ronald Reagan said,
“We simply cannot blame crop failures and oil price increase for our basic
inflation problem. This continuous, underlying cause was poor government
policy.” What policies might he have been referring to?
The expansionary fiscal as well as monetary policies can be utilized to
enhance aggregate demand and move economy to the potential outputs.
According to it, the changes in aggregate supply as well as aggregate
demand affect level of price along with income.
(3) (6 points, 3 points each part) GOO
(a) Do you agree that President Reagan’s economic policies were a failure in
the context of the rest of the decade?
Answer: American president became failure in relation to financial program.
In starting, President Reagan made promise for the healthy development. But
the nation had experienced recession and unemployment. The big failure of
economic program of Reagan was his incapability to decrease federal deficits.
(4) (4 points) The day after the U.S. stock market crash of October 19, 1987,
Federal Reserve Board Chairman Alan Greenspan issued the following
statement: “The Federal Reserve, consistent with its responsibilities as the

nation’s central bank, affirmed today its readiness to serve as a source of
liquidity to support the economic and financial system.” What school of
thought may prompt that statement? That is, which school (or schools) has a
role for active monetary policy?
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