1) Real Business Cycle theory and the financial instability hypothesis of Hyman Minsky represent two distinct schools of thought regarding the causes of recessions. What are the major differences between the two theories of recessions and what are their implications for real estate investors?
2) Discuss two occasions when the national government of the People’s Republic of China utilized Keynesian-style countercyclical fiscal stimulus to support China’s economy. What characteristics of China’s government or economy make it easier or more difficult to utilize fiscal policy for macroeconomic stabilization, compared to in the U.S.?
3) In his New York Times column of May 27, 2005, economist Paul Krugman stated: “After all, the Fed’s ability to manage the economy mainly comes from its ability to create booms and busts in the housing market.” What do you think he meant by that statement? Is it an accurate characterization of the Federal Reserve’s influence over the real economy? (Note: You do not have to access the original column to answer the question.)
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