Econ-calculations FED

Econ-calculations FED

ANSWERS

ECON-
Calculations FED

QUESTIONS

Briefly answer the following questions:

1. When a market is in equilibrium, when does it generate an efficient outcome for society, and when does it fail to do so? Explain, using supply and demand diagrams, and examples from the real world. (SBS1)

2. In this class you have been introduced to the goals of efficiency (achieving the most net benefit) and equity (achieving more equal outcomes). The tradeoff between these goals can be seen in markets such as health care, labor, higher education, and housing. Explain how a policymaker’s values regarding the importance of efficiency versus equity would cause them to intervene in a market, or leave it alone. (SBS2, SBS4)

3. Some people claim that the Federal Reserve can drive the unemployment rate to zero by holding interest rates at a very low level. Critique this argument by pointing out its flaws. (SBS3)

 

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