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1. Long-run and Short-run Analysis in Macroeconomics I. Why is it important to distinguish short run versus long run period in macroeconomics? Explain. What are
1. Long-run and Short-run Analysis in Macroeconomics I. Why is it important to distinguish short run versus long run period in macroeconomics? Explain. What are the criteria for this division? Give complete explanation. (Warning: do not rewrite the text from the lecture slides!) 11. Indicate whether each item in the following list is related to either short-run (SR, business cycle) macro, or to long-run (LR, economic growth) macro, or to the both. Explain each of your answers briey. Instluction: Do not rewrite the tasks, put you answers in the following table. I W... I (a) The Federal Reserve reduces interest rates in an attempt to stimulate economic activity and higher employment. (b) The federal government introduces higher standards for estimation of the quality of high-school education. (c) The Congress approves a program providing a considerable increase in government spending on health care. ((1) The Central Bank decreases the rate of money growth to lower ination. (e) Consumers become thriftier because news of layoffs makes them fear for their jobs. (f) The federal government cuts income taxes and welfare benets to encourage more people to enter the labor force. (g) The introduction of an investment tax credit stimulates lms to nance more investment projects. (h) The federal government gives states and localities more money to repair roads, bridges, and schools
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