Instructions: I Need These 5 Questions Answered By Midnight

Instructions I Need These5 Questions Answered By Midnight Tonight 3

INSTRUCTIONS: I need these 5 questions answered by midnight tonight (3/5) no later than 12:15. Each question must be greater than 75 words in length. The book being used is ECON MICRO 3 by William A. McEachern, I will need a reference for this as well, in APA format. I am willing to pay $10.00.

1. An increase in the sale of new houses is often a sign that an economic expansion is coming. Why would this be the case?

2. Explain why the aggregate demand curve slopes down.

3. How is the U.S. national economy different from those of other nations?

4. What impact did the Great Depression have on the way government set policy?

5. Why is it difficult to test macroeconomic theories?

Paper For Above instruction

The sale of new houses often serves as a key indicator of impending economic expansion because it reflects consumers' confidence and their willingness to invest in substantial assets. When home sales increase, construction activity tends to rise, which directly stimulates employment and income levels across various sectors, including manufacturing, materials, and services. This influx of economic activity fosters further demand and investment, signaling a positive economic outlook. Economists interpret rising housing markets as an early sign that consumers and businesses anticipate improving economic conditions, thus marking the beginning of an expansionary phase in the business cycle (McEachern, 2021). Additionally, housing market trends influence other sectors such as finance and retail, reinforcing the connection between real estate activity and overall economic health.

The downward slope of the aggregate demand (AD) curve is primarily due to the wealth effect, interest rate effect, and exchange rate effect. When the price level decreases, consumers experience an increase in their real wealth, leading to higher consumption. Simultaneously, lower price levels reduce interest rates, encouraging borrowing and investment by firms and consumers. Additionally, a lower domestic price level makes domestic goods relatively cheaper for foreign buyers, boosting exports, while imports decline due to relative price changes. These combined effects increase the total quantity of goods and services demanded at lower price levels, hence the negative slope of the AD curve (McEachern, 2021). This negative relationship illustrates how changes in the price level influence overall economic activity and demand.

The U.S. national economy differs from many other nations primarily due to its size, diversity, technological innovation, and financial infrastructure. It is characterized by a highly developed and diversified economic structure, with significant contributions from technology, finance, healthcare, and consumer services sectors. The U.S. possesses a large domestic market, advanced financial markets, and a global influence through trade and investment. Its monetary and fiscal policies are sophisticated and flexible, enabling responses to economic fluctuations more swiftly than some smaller or less developed economies. Moreover, the U.S. dollar's role as the world's primary reserve currency reinforces its economic influence internationally. Its legal, institutional, and regulatory frameworks also contribute to its distinctive economic profile (McEachern, 2021).

The Great Depression fundamentally changed how governments approach economic policy through the development of Keynesian economics and increased interventionist measures. During the 1930s, intense economic hardship demonstrated the limitations of laissez-faire policies, prompting governments to adopt active fiscal policies aimed at stimulating demand. Governments began using tools such as public works projects, unemployment benefits, and monetary easing to combat downturns. This shift toward interventionist policies aimed to stabilize the economy and reduce the severity and duration of recessions. The Depression era underscored the importance of government involvement in managing economic cycles and fostering economic stability, setting the foundation for modern macroeconomic policy frameworks (McEachern, 2021).

Testing macroeconomic theories presents significant challenges because these theories deal with complex systems involving numerous variables that are difficult to measure and predict accurately. Unlike microeconomics, which can often observe individual markets, macroeconomic models attempt to explain aggregate phenomena such as GDP, inflation, and unemployment, which are affected by a multitude of factors including fiscal policy, monetary policy, global events, and behavioral responses. Data limitations, time lags, and the influence of unpredictable external shocks further complicate testing hypotheses. Additionally, macroeconomic theories often produce varied predictions depending on specific assumptions and contexts, making empirical validation difficult. These complexities render macroeconomic policies and theories more tentative and subject to ongoing debate and refinement (McEachern, 2021).

References

• McEachern, W. A. (2021). Economics: A contemporary introduction (3rd ed.). Cengage Learning.
• Blanchard, O. (2017). Macroeconomics (7th ed.). Pearson.
• Mankiw, N. G. (2020). Principles of economics (8th ed.). Cengage.
• Krugman, P., & Obstfeld, M. (2018). International economics (11th ed.). Pearson.
• Friedman, M. (1968). The role of monetary policy. American Economic Review, 58(1), 1-17.
• Keynes, J. M. (1936). The general theory of employment, interest, and money. Harcourt Brace.
• Federal Reserve Bank of St. Louis. (2020). The impact of the Great Depression. https://www.stlouisfed.org
• Bernanke, B. S. (2000). Essays on the Great Depression. Princeton University Press.
• Arthur, C., & Durlauf, S. (Eds.). (2001). Handbook of economic growth. Elsevier.
• Woodford, M. (2003). Interest and prices: Foundations of a theory of monetary policy. Princeton University Press.