Malikah Bennifield
MNGT 5620 Current Economic Analysis
Joel Light
Webster University
February 13, 2010

Problem 1
Demand Curve-right a) Stock market boom that increases consumption spending b) Increase in government defense expenditures c) Increase in money supply
Supply Curve-right a) Increased immigration b) Decrease in minimum wage c) Less generous unemployment insurance
Problem 2
Researchers have not reached a consensus about just how these two events are linked. The question still remains on how to interpret the negative correlation between wealth and the saving rate over a long period. The movements are consistent with the “wealth effect”, in which an increase in wealth directly causes households to increase their consumption and decrease their saving.
Chart Higher prices ^ Agrregrate demanded Lower Prices Less Output More Output Demanded demanded
Problem 3
Classical economists viewed the economy as inherently stable and self adjust to deviations from its long-term growth trend, whereas Keynes viewed it as unstable and required government intervention to get back on track.
Problem 4
Formula??
MPC * additional income
? * 20 billion

Problem 5
Yes. The MPC is the fraction of each dollar of disposable income not spent on consumption. If a poor person doesn’t spend the money then it’s considered MPS however the millionare can spend money but the difference remaining can be that equal to the poor person’s MPS. Hence MPS =.25 and MPC=.75 from a $1.
Problem 6
Formula
MPC x additional income .01 * 1billion= 1 billion
Internet Question

The North and South both took several approaches to implement and find a successful way to tax the people. The south had one of the “lightest” tax burdens. There was little