National Income and Public Policy
Professor Allen C. Kelley
October 5, 1998

   WALL STREET JOURNAL (Monday, 10/5)

1. "Is Investors' Aversion to Risk Contagious?," p. A1
   • What are the "signs" that the economy is, and the economy is not, headed toward recession?

     How would you represent each of these on the income-expenditure diagram?

   • What is a "junk" bond, and what is its "typical" premium above treasures; by how has this premium changed, of late, and why?

   • What happens to the level, and the composition, of "investments" as consumers and investors become more "averse to risk?"

     What happens to the "yield" on US treasury bonds? Why?

ANNOUNCEMENTS

1. Quiz Coverage

   Tomorrow's quiz will be around 50% on text/lectures, and the remainder on the MacroNews.