Macroeconomic Questions

Answer the following questions separately:

  1. Economists believe in the “Long run neutrality of money”; what does that mean? If monetary policies help in the short run, but do not help in the long run, should we not bother with those policies? What does this tell you about the current monetary policies of the Fed?

2.Chapter 15 suggests increased health care expenditures will crowd out other expenditures. What component of GDP do you think will suffer?

  1. Using that same argument, Nebraska has debated casino gambling several times over the years. Proponents say the additional entertainment dollar expenditures would be great for the economy. Opponents say it will only crowd out the entertainment expenditures elsewhere. Without debating the merits of gambling itself, which position do you take and why?
  2. Submit your thoughts on how shifts in the natural rate of unemployment related to the rapidly aging US population might change the way we think about that natural rate of unemployment.