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Economics
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22 Aug 2019

Explain briefly how a contractionary gap OR an expansionary gap is formed (choose one; cite clearly which of the two you are explaining, and don’t just give a definition of each--say why they are formed).

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Reid Wolff
Reid WolffLv2
22 Aug 2019

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Related questions

1. Why is the money multiplier considered to be a potential multiplier rather than an indication of exactly how much multiplication should be expected?

2. If you deposit $6,000 in a bank, calculate how much the bank must keep as required reserves and how much it can loan out if the required reserve ratio was 5percent. What would be the money multiplier?

3. Name four of the six primary functions of the central bank.

4. Explain how monetary policy can be used to close the (a) contractionary gap and (b) inflationary gap.

5. Discuss some the difficulties associated with expansionary monetary policy

6.What is your take on the amount of money politicians spend on political campaigns? Does it have a positive/negative impact on the economy?

Most macroeconomists believe that it is a good thing that taxes act as an automatic stabilizer and lower the size of the Keynesian multiplier. First, explain both – how do taxes act as an automatic stabilizer? And how do they affect the size of the multiplier? However, a smaller multiplier means that the change in government spending needed to erase an expansionary or recessionary gap is larger. Is this an inconsistency? Why or why not?

Quoting further "The causes of the wage gap aren't simple; they are myriad and interlocking. One is experience. Women are much more likely than men to leave the workforce or reduce their hours, often to care for family members, especially beginning in their early 30s, and that's when the gender wage gap starts to swell."

Demonstrate and explain how child-care costs might cause a woman to choose to work fewer hours than a man.

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