Identify how exchange rates are determined in markets and how governments can influence these markets

Using a Q&A format for your project paper is encouraged. Provide words cited (sourced) when you use the words, thoughts and ideas of others in you answers. In preparing your project paper you should answer all questions and restate the question and follow it with your response.

1. What is the gross domestic product? 2. Do increases in gross domestic product necessarily translate into improvements in the welfare of citizens? Explain your answer. 3. What is unemployment? Why can’t it be driven down to zero? 4. What is the Consumer Price Index and how is related to the cost of living? 5. How does increased immigration affect wages and the level of output in the economy? 6. What are the benefits of increased investment? 7. Do trade deficits help or hinder economic growth? Explain. 8. What factors determine technological progress? 9. How do we define a recession? 10. Why doesn’t the economy always operate at full employment? 11. Why do governments cut taxes to increase economic output? 12. If a government increases spending by $10 billion, could total GDP increase by more than $10 billion? Explain. 13. Why does investment spending depend on interest rates, among other factors? 14. Why would most investments in the economy fail to take place if there were no financial institutions? 15. Why do all societies have some form of money? 16. Why is the chairman of the Federal Reserve one of the most powerful people in the country? 17. Identify how the economy makes the transition from the short run to the long run. 18. Contrast the pros and cons of protectionist policies. 19. Identify how exchange rates are determined in markets and how governments can influence these markets. 20. Final requirement. Critics of Keynesian economics say the increase in government spending provide only temporary relief and ultimately harm the economy. Explain (in no less than 200 words) why.

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