Effects of tourism on economic growth in China

A huge increase in the amount of expenditure from foreign tourists with an average of average of 19.7% in each year was recorded between 1978 and 2001. For this reason, the World Tourism Organization had expected that China would have been the primary tourist destination in the world by 2010 (Yan Wall 260). Currently, it is speculated that, by the year 2015, China will become the second largest travel and tourism economy in the world after the United States. The main factors influencing the tremendous growth in China’s economy include its flourishing and widely considered growth in the tourism industry. This is also because of the open policy established by the Chinese, and an increased number of flights between China and other countries in the world. Moreover, various great improvements such as the transport infrastructure in China, accommodation in hotels and the increased tourist attractions have significantly contributed to this growth. One of the major theories in macroeconomics is the economic growth theory. Through the use of quantitative analysis, it has been shown that the effect of tourism on the developing economy of China bearing in mind the undeveloped levels of their tourism industry, tourism plays a significant role in the development of the country’s economy. In the conclusion of their 1992 study, Yan and Wall (270) noted that both domestic and international tourism only had a slight impact on the national level. This is with regards to the diversity and size of the economy in China. Using the traditional Type I Input-output model, they did not include the impacts of domestic tourism. Contrary to the use of outdated data in this case, the World Travel and Tourism council has recently projected the indirect and direct effects of domestic and…In this paper, the effect of tourism on the economic growth in China will be thoroughly evaluated, as the impact of tourism in China has not been sufficiently analyzed, prior to the time of the conducted analysis. The size of tourism in China has significantly increased. A significant and sustainable growth has been experienced in China consequent to both domestic and international tourism for the past 20 years. With this, the ratio of tourism to the GDP in the country has been shown to increase every year. Through the creation of the social accounting matrix, the type II input-output model was developed. This model contends that high percentage of total household income, GDP, and total Chinese employment depends on the expenditures of international tourism. The variation displayed by the percentages is clearly explained by the sectoral make up of tourist expenditures, as well as the sectoral variations in ratios between capital and labor, backward linkages and labor productivity.The designation of an account as either endogenous or exogenous is the most fundamental step towards movement from SAM to a model structure. According to Bulmer-Thomas, the Social Accounting Matrix (SAM) plays an essential role in making accounting records for different economiesAn investigation was performed on the dependence of Chinese economy on the expenditure by tourists. It was necessary to integrate the IO impact Model with the demand for endogenous consumption that is based on the SAM model. These instruments were used to estimate the direct, indirect and induced dependence that the Chinese economy has on the international tourism.The impact of international tourism in China displays a lot of prospects for Chinese economy

Assignment Macroeconomics Questions

It should be noted that the impacts of natural rate of unemployment are felt in both healthy and poor economies. As Gwartney et al (2008, p.181) note, the major reason is that the movement of workers in the labor market results in frictional unemployment. Those workers seeking for better jobs or leaving jobs incase of displacement lead to unemployment as most of them fail to arrange for another job. Other people may also leave the labor force in certain economies due to personal reasons leading to frictional unemployment. In such situations, the moving workers will eventually return into the economy as unemployed when they fail to secure the desired jobs until the secure a job. In another situation, structural unemployment can lead to natural rate of unemployment. The reason is that structural unemployment result in workers preferring specific aspects for specific jobs in certain markets. However, adjustments in worker skills and economic requirements will often break the balance between job skills and job availability. This is clearly reflected in technological advancement that has continued to push workers to lower positions. Additionally, natural rate of unemployment may result from surplus unemployment as a consequence of labor unions and minimum wage regulations. In states or economies where minimum wage levels are set higher, there is high probability for unemployment to occur. The reason is that employers will always trim their worker forces in order to level the salaries with regulation requirements and at the same time maintain their margins. Generally, an economy experiencing natural rate of unemployment means that the labor market lacks involuntary unemployment. That is all people comfortable with the existing wage rates are working. The market remains with limited voluntary employment since some people are unemployed because they seek to worker for better paying jobs or working conditions. Hence, natural rate of unemployment is a disputed concept during the labor market equilibrium and when unemployment adjusts according to price inflation and real wages. However, the concept stands as long as the labor market behaves like other markets or is able to clear at a stable price. Question 5.4 In an economic perspective, good inflation will occur in case of aggregate-supply-caused inflation (Eagle Domian, 2003). This happens when aggregate demand does not change concurrently with nominal contracts. Now, if we consider a situation where only a single consumption product exists in a closed economy, this presumption can be explained clearly. In such a case people will use the entire product because it cannot be stored. In addition, manufacturers of the product will be characterized by aggregate levels of labor required. These manufacturers will be in a position to maximize profits under the existing conditions of real land and wage rate. When firms’ productivity is promoted more than expected, the conditions will be higher. On another hand, when the conditions are established prior to firms’ production, the contracts ideal for proficient consumption allocation will dynamically adjust according to productivity. The adjustment in ideal contracts occurs as a result of good inflation when nominal aggregate

Introduction to MacroEconomics Fiscal and Monetary Policy

Introduction to Macro-Economics: Fiscal and Monetary Policy Fiscal and Monetary Policy and their differences With an intention of achieving the economic stability of the nations, governments have always taken in account various economic tools such as taxes, public spending, borrowing and debt management. It is in this context that Fiscal Policy is considered as the measures adopted by the government to adjust its level of expenditure with the purpose to monitor and thus influences the economic growth (Gupta, 2007). Similarly, Monetary Policy is the action taken by the central banks of nations, boards or other regulatory committees those are in the authority of determining the size and rate of the money supply which affects the interest rates. Hence, the fiscal and monetary policies are interlinked in relation to the economic structure and development. Monetary policy is maintained through measures like increasing the interest rates provided to the public or maintaining the total amount of bank reserves (Gupta, 2007). 2. The Federal Reserve policy makers and their tools Federal Reserve Board is the authority responsible for monetary policy of the U.S. The tools used by Federal Reserve Board are concerned with open market operations and the federal funds rate. Open market operations include government securities such as notes, bonds and also treasury bills. This method is very important as Federal Reserve Board uses it to single out and implement the policy changes (Lien, 2008). Federal funds rate is the fundamental policy target used by Federal Reserve Board. It is the rate of interest for borrowing U.S dollars that the Federal Reserve Board provides on the basis of its previous day’s closing rate against the US Dollars (USD). Any changes beyond this range during the day will invite the intervention by the central bank in terms of purchasing or selling of US Dollars (Lien, 2008). An expansionary monetary policy has an adverse effect on maintaining the balance of payments (BoP) whereas a contractionary policy intends recovering it. Fall in interest rate is a result of expansionary monetary policy but rise in interest rates are the effect of an expansionary fiscal policy (Cherunilam, 2008). 3. Keynes vs. Friedman There are key differences between the concepts propagated by Keynes and Friedman. Keynes considered the great depression resulted into the failure of the free market whereas Friedman had a different saying. According to Friedman, Federal Reserve had failed. Keynes believed in diplomacy for bureaucrats like himself but Friedman believed that the establishment of safe government was possible only by implementation of rigid rules. Keynes proposed that capitalism should be in shackles whereas Friedman thought it is beneficial to leave capitalism untouched (Skousen, 2007). 4a. President Obama, through the EPA, and with the agreement of the automobile companies, increased the mileage requirements for automobiles sold in the US. The decision taken by President Obama is not related to any of the fiscal or monetary policies. This is the situation of an attempt of upgrading the environment. This decision comes under the National Fuel Efficiency Policy which deals with the Environment Protection Agency (EPA) (The White House, 2011). 4b. For the past several years subsidies have been given for the production of corn based ethanol fuel. This situation is considered within the periphery of the fiscal policy. In this case, the decision taken by the government to provide subsidies for the production of corn-based ethanol fuel is intended to encourage the organizations. Subsidies are a benefit offered by the government to individual or particular groups. Subsidies are generallyprovided in form of reduction in tax or cash payments. Subsidies are provided by the government with an intention of development and to remove the unfavorable circumstances. In simple words, subsidy is the monetary aid provided by the government. 4c. Due to the nuclear crisis in Japan, inspections of United States nuclear plants are taking place and additional safety requirements will be written. The above situation falls within the policy. In this case, government tries to restructure or build up a better infrastructure which is concerned with the implementation of fiscal policy. 4d. There has been some speculation that tax deductions, such as the one allowed for interest on home mortgages, will be eliminated or altered. This decision of reducing tax comes under the fiscal policy as this has a direct affect on the earning and living standards of the people in the economy. Tax reduction is one of the vital tools used by the government to standardize the economy of the citizens. Elimination of tax on the interest of home mortgages is related with an attempt to upgrade the socio-economy of a person. 4e. The Federal Reserve Board of Governors has recently stated they will maintain interest rates at or near their current low levels until 2014. This particular situation deals with the monetary policy of the nation as Federal Reserve Board of Governors are concerned with monetary policy of the US concerning the changes in interest rates. They are responsible for the regulation of the treasury (Federal Reserve Bank of New York, 2011). 4f. When President Clinton was in office during the 1990’s there was an intentional policy of reducing interest rates, both short and long-term. This situation deals with fiscal policy of the nation. This was the step initiated to increase the economic growth of the country. By decreasing the interest rate, entire country was to be benefited and the affect of inflation was to be reduced. 4g. Beginning with the Bush administration and continuing with the Obama administration there was a bailout of the financial system. Here, in this situation monetary policy has been focused. Financial systems of a nation entirely deal with the monetary policy. 4h. Sudden increase of interest rates by Mr. Paul Volker This is the situation of monetary policy. Here, Paul Volker, the Chairman of the Federal Reserve System introduced this sudden increase in interest rate with an intention to control increasing inflation rate. It is worth mentioning that monetary policies deal with the inflation and deflation arising within the economy (Rittenberg Tregarthen, 2010). References Cherunilam. (2008). International economics (5th ed.). India: Tata McGraw-Hill Education. Federal Reserve Bank of New York. (2011). Monetary policy responsibilities. Retrieved from http://newyorkfed.org/aboutthefed/fedpoint/fed46.html Gupta, J. R. (2007). Public Economics in India Theory and Practice. India: Atlantic Publishers Dist. Lien, K. (2008). Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves (2nd ed. illustrated, Rev.). U.S.A: John Wiley and Sons. Rittenberg, L. Tregarthen, T. (2010). Principles of Macroeconomics. Web Books Publishing. Skousen, M. (2007). The big three in economics:Adam Smith, Karl Marx and John Maynard Keynes. M.E. Sharpe. The White House. (2011). President Obama Announces National Fuel Efficiency Policy. Retrieved from http://www.whitehouse.gov/the-press-office/president-obama-announces-national-fuel-efficiency-policy

Impact of Keynesian Economics on British and American Politics

The theories pleaded by the classics were later on supported by the economists like J.S. Mill, Pareto, and Meade etc who considered the concept of social welfare or well being. They pleaded for the non-interventionist approach as they found that the market perfection would lead towards efficiency in production, consumption, and distribution to maximize social welfare. Any government intervention was supposed to be distortive, as free market operation along with the existence of perfect competition would maintain the full employment level of equilibrium in the economy. The theories were based on the famous ‘Say’s Law of Market’1 and neutrality of money (explained in the quantity theory of money)2. This school of economic thought is termed as neoclassical macroeconomics, which is nothing but a modified form of the classical macroeconomics. The main propositions of the neoclassical school are:1. The free operation of market forces would always lead towards full employment equilibrium and there would be no existence of involuntary unemployment. Any government intervention would cause a distortion in the system.3. The product and factor markets determine the employment and aggregate level of output and there is no role in the money market. The money market determines the values of the monetary variables only. This is known as the neutrality of money.

1 ) The Following Table Gives Categories For Income And Expenditures For A Representative​

Net exports of goods and services – 550 Net interest paid by business 440
Government purchases of goods and services 1,650
Gross private domestic investment 2,200
Indirect business taxes 440
Rental income of individuals plus implicit rent on owner-occupied housing 220
Wages, salaries, employee compensation 6,600
Personal consumption expenses 7,700
Depreciation 880
Proprietorial income 1,100 Corporate profits 1,320 Macroeconomics

Australia Is A Small Open Economy With A Flexible (Floating) Exchange Rate System Use The

Question 2.
Australia is a small open economy with a flexible (floating) exchange rate system. Use the
Mundell-Fleming model (i.e. the open-economy IS-LM-IP model) to analyse what will
happen to income, the exchange rate, and the trade balance (net exports) in response to the
following shocks. Carefully explain the adjustment process in each case.
a) A significant fall in the foreign demand for Australian minerals export.
b) The Abbott government implements a fiscal expansion program, other things held
constant, and the Reserve Bank of Australia keeps the interest rate fixed.Macroeconomics

Question 3 (16 Points) Assume The Following Model Of The Economy With The Price Level Fixed At 1 C =

Question 3. (16 points) Assume the following model of the economy, with the price level fixed at 1:
C= 0.8(Y -T)
T= 1,000
I= 800 -20r
G= 1,000
Y=C+1+G
MS/P = M/P= 0.4Y -40r
M = 1,200
a.
(3 points) Write a numerical formula for the IS curve, showing Y as a function of r
alone. (Hint: Substitute out C, I, G, and T.)
b.
(3 points) Write a numerical formula for the LM curve, showing Y as a function of
r alone. (Hint: Substitute out M/P.)
C.
(5 points) What are the short-run equilibrium values of Y, r, Y-T, C, I, private
d.
saving, public saving, and national saving?
(5 points) Assume that G increases by 200. By how much will Y increase in short-
run equilibrium? What is the government-purchases multiplier (the change in Y
divided by the change in G)?Macroeconomics

The Following Question Is About The Longrun Economic Growth

a) Consider the following

Question I. The following question is about the long-run economic growth. a) b) Consider the following equation of the neoclassical (Solow—Swan) growth model:
NC = sf (k) — (6 + n)k . Explain in words what you understand by this equation and represent it on a diagram. Assume that a large portion of the capital stock in a country has been destroyed due to a war. Show, using the diagram, how this country can grow over time and reach the
steady state, even in the absence of technical progress. In answering this question,
assume that the saving rate and population remain constant. Suggest slome government policies that would foster economic growth. Justify your
suggestions based on the growth models covered in this course. Macroeconomics

Why Would We Expect Perfectlycompetitive Firms To Employ6 ) Adds Profits?

olgtltligtWhat is marginal-cost pricing? Why would we expect perfectly-competitive firms to employ6 ) Adds profits? gt; customers who are extremly
sensitive to prices this group might not
otherwise buy from a company unless it
were willing to engage in marginal
cost pricing.
quot;) Accessory…Macroeconomics

Contrast Say’S Law With Keynes’ Law

olgtltligtContrast Say’s Law with Keynes’ Law. Do they provide completely different interpretations of

Question

olliContrast Say’s Law with Keynes’ Law. Do they provide completely different interpretations of

macroeconomic behavior? Provide examples and explain your answer./li/ol

Macroeconomics

Foundations Of Macroeconomicsaggregate Demand And Aggregate Supplyin The Economy When

Question

Foundations of Macroeconomics

Aggregate Demand and Aggregate Supply

In the economy, when

interest rates are increasing _______.

A. decreases the opportunity cost of future consumption, but has no effect on the opportunity cost of present consumption.

B. increases the opportunity cost of future consumption, but has no effect on the opportunity cost of present consumption.

C. reduces the opportunity cost of future consumption

D. reduces the opportunity cost of present consumption

Business

The Distinction Between Consumption And Investment Is A That Only Households Consume And Only Businesses

Question

.The distinction between consumption and investment is:

A. that only households consume and only businesses

invest.

B. somewhat arbitrary, since investment includes housing investment, which does not increase future

productive capacity.

C. that investment always increases future productive capacity, while consumption does not.

D. arbitrary, since the same expenditure may be counted as a consumption item in one year and an

investment in another

Macroeconomics

10% What Would The Impact Of The Price Increase Have On The Number Of Soccer Balls Sold And Total Revenue?

olgtltligtDicks research department estimates elasticity of demand for soccer balls in the store to be

Question

olliDicks research department estimates elasticity of demand for soccer balls in the store to be

-1.5. If each soccer ball delivered to the store costs $10, what is the optimal markup factor and the optimal price that would maximize your profit?/lili if you raised your price by 10%, what would the impact of the price increase have on the number of soccer balls sold and total revenue? /li/ol

Macroeconomics

A Firm Is Producing 1 000 Units Of Output With 40 Units Of Labor And 30 Units Of Capital The Marginal Product Of

Question

A firm is producing 1,000.units of output with 40 units of labor and 30 units of capital. The marginal product of

the last unit of labor and capital are, respectively, MPL= 60 and MPK =120. The prices of labor and capital are, respectively, w =3= and r = 40.

a. At the combination of inputs the MRTS is ________________( greater than, less than, equal to) the input price ratio, w/r.

b. The firm can increase ____________ by one unit while reducing ______________ by __________ unit(s), and keep output constant. This will reduce cost by $ ___________ .

c. To minimize the cost of producing 1,000 units of output the firm will increase __________ and decrease _________ until __________ equals __________ or, in other words, __________ equal _______.

Macroeconomics

How Would An Increase In The Supply Of Labor Affect The Natural Level Of Employment And Potential Output? How

Question

–How would an increase in the supply of labor affect the natural level of employment and potential output? How

would it affect the real wage, the level of real GDP, and the price level in the short run? How would it affect long-run aggregate supply? What kind of gaps would be created? –

–Suppose the minimum wage were increased sharply. How would this affect the equilibrium price level and output level in the model of aggregate demand and aggregate supply in the short run? In the long run?

–Explain the short-run impact of each of the following.

A discovery that makes cold fusion a reality, greatly reducing the cost of producing energy

Macroeconomics

No Plagiarism

No content from other students

Classical economists belief that prices and quantities adjust to the changes in the forces of
supply and demand and that the economy produces its potential output in the long run. On the
contrary,…Macroeconomics

Consider The Static Asad Model Suppose The Actual Price Level Is Less Than The Price Level Individuals Expect

Question

Consider the static AS-AD model. Suppose the actual price level is less than the price level individuals expect.

Which of the following is true?

(a) output is currently less than the natural level of output (b) the AS curve will tend to shift up over time

(c) the AD curve will tend to shift up over time

(d) the nominal wage will tend to increase as individuals revise their expectations

Macroeconomics

Economics Is Best Defined As The Study Of How?Select One A The

Question

Economics is best defined as the study of how?

Select one:

a.

the

government should deal with unemployment and inflation

b.

individuals decide to use scarce resources in an attempt to satisfy their unlimited wants

c.

to make money

d.

to run a business

e.

to eliminate the problem of scarce resources

Macroeconomics

May 2016 1econ1000 Open Campusworksheet #1 (Covers Units 1 To 5)

Question 1

Classify

Question

May 2016 1

ECON1000 Open Campus

Worksheet #1 (Covers Units 1 to 5)

Question 1

Classify

the following as microeconomics or macroeconomics and provide a justification

for your choice.

(a) Research into why the growth rate of total production increased.

(b) A theory of how consumers decide what to buy.

(c) An analysis of IBM’s share of the personal computer market.

(d) Research on why interest rates in a country was unusually high.

(a) The local pizza restaurant is advertising a special. If you buy one individual sized

pizza, you get the next one at 25% off, the third one for 50% off and the fourth

one for 75% off. Your marginal benefit from eating pizza is shown in the table

below:

# Pizzas Marginal Benefit (MB) Marginal Cost (MC)

0 0

1 7 6

2 4 4.5

3 2 3

4 1 1.5

(i) If the price of a pizza is $6 how many should you buy?

(ii) Provide an example to justify your choice.

(b) John Amaker owns orange groves and hires pickers for a two-week period. The

output from the orange groves are shown in the table below:

Pickers Oranges picked

1 1000

2 2000

3 3000

4 3900

5 4700

6 5400

(i) What is the marginal product of the 2nd picker? the 6th picker?

(ii) When does diminishing returns start to set in? Explain.

May 2016 2

Question 3

Suppose that in an hour an American worker can produce 100 shirts or 20 computers,

while a Chinese worker can produce 100 shirts or 10 computers. If each country has 4

hours available, (put shirts on horizontal axis)

a) Graph the production possibilities curve for the United States. (3 marks)

b) Suppose that without trade the labour in each country spend half their time

producing each good. Identify this point on your graph. (2 marks)

c) If these countries were open to trade, which country would export shirts? Explain.

(6 marks)

d) How will specialization and trade make America and China better off?

(4 marks)

Question 4 (26 marks)

(a) Answer True or False to the following and provide a justification for your choice.

(i) The price of a good X rises, causing the demand for good Y to fall. The

two goods are therefore substitutes. (2 marks)

(ii) A shift in supply causes the price of a good to fall. The shift must have

been an increase in supply. (2 marks)

(iii) An increase in income would likely lead to an increase in the prices of

both normal and inferior goods. (3 marks)

(iv) If demand increases and supply increases at the same time, price will

clearly rise. (4 marks)

(v) The price of good A falls. This causes an increase in the price of good B.

Goods A and B are therefore complements. (4 marks)

(b) Suppose the market demand for pizza is given by Qd = 300 – 20P and the market

supply for pizza is given by Qs = 20P – 100.

(i) Calculate the equilibrium price and quantity. (4 marks)

(ii) Calculate consumer surplus at equilibrium. (3 marks)

(iii) Calculate producer surplus at equilibrium. (3 marks)

(iv) Determine total economic surplus. (1 mark)

May 2016 3

Question 5 (10 marks)

The government has decided that the free-market price of cheese is too low. Suppose the

government imposes a binding price floor in the cheese market.

a) Use a supply-and demand diagram to show the effect of this policy on the price of

cheese and the quantity of cheese sold. (3 marks)

b) Is there a shortage or surplus of cheese? (1 mark)

c) Farmers complain that the price floor has reduced their total revenue. Is this

possible? Explain. (2 marks)

d) In response to farmers’ complaints, the government agrees to purchase all of the

surplus cheese at the price floor. Who benefits from this new policy? Who loses?

Explain. (4 marks)

Question 6 (28 marks)

There is currently a thriving, unregulated market in Smartphone protective cases. The

supply and demand equations for this market is given below:

QD = 5000 – 2P

QS = -600 + 12P

The government decides to tax sellers of this product by imposing a $100 tax.

a) Represent the equilibrium price and quantity on a demand and supply diagram.

(3 marks)

b) Calculate the consumer and producer surplus before the tax. (4 marks)

c) How is this proposed tax going to affect the market for Smartphone cases – that

is, how will it affect the price of the cases and the amount of cases that are sold?

Illustrate on the same diagram in part a. (10 marks)

d) Considering that the government will earn revenue, overall, do you think that the

society benefits from such a move? Explain. (3 marks)

e) Calculate the consumer and producer surplus after the tax. (6 marks)

f) Calculate the deadweight loss of the tax. (2 marks)

TOTAL MARKS = 100

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##(###########################################################################…Economics

Consider The Basic Solow Model With

Question

Consider ye K 1/ 3 2
S = 101.
y = (K ) 1 3
= 4 13
J = 31.
at steady state
f (k )
k
= 10
* 1/ 3
3
10
3/ 2
(as The capital share of national income: 2sue)
y = * 13 / Y = K 13 2 2 3
( b )
The
marginal product…Macroeconomics

One Method Of Conducting Quantitative

easing is the central bank:

purchasing long-term

Question

One method of conducting quantitative easing is the central bank:

purchasing long-term

government bonds to increase long-term interest rates.

purchasing long-term government bonds to lower long-term interest rates.

selling long-term government bonds to decrease long-term interest rates.

selling long-term government bonds to lower long-term interest rates.

purchasing short-term government bonds to lower short-term interest rates.Macroeconomics

Hi Tutorhow To Solve These Question?Find The Golden Rule Capital Stock And Add It To

Question

hi tutor

how to solve these question?

Find the Golden Rule capital stock and add it to

your graph in solow model. (Note: you need to maximise consumption per worker.)

Calculate: (Please show the entire calculation process)

• capital per person, y∗ g

• output per person, k∗g

• consumption per person, c∗ g

• investment per person, i∗g

thank you 🙂

(+ + It = Yt = F ( kt, it )
It = KEH – (1-8 ) kt.
( i-e. KTH = SPIKE, L ) + (1-8 ) KE )
KTH
It = $ Elkt, It )
steady – state :
k*
kt – KEH.
je. K* = KTH = kt.
RX .
7 xx
At steady- strate 8 /* = SF…Macroeconomics

Which Of The Following Is Correct As An Interpretation Of The Keynesian Consumption Function?

a. The

Question

Which of the following is correct as an interpretation of the Keynesian consumption function?

a. The

Keynesian consumption function states that as income increases consumption increases more than proportionately.

b. The Keynesian consumption function implies that your consumption depends on your overall wealth, rather than your current income.

c. The Keynesian consumption function predicts that if your current income is less than your expected future income, you should borrow today to finance your current consumption needs.

d. The Keynesian consumption function is consistent with the observation that consumption can increase even if disposable income remains the same.

Macroeconomics

Please Help Me Out Of The Following 6 Questions

1. Suppose an earthquake

Question

b. For the case, where there are 2 steady states, show graphically how the transitional dynamics for this economy are. Namely, suppose you start to the left of the low steady state capital stock, what happens? What about to the right?

6. Suppose total National Savings, St, is St= sYt – hKt. The extra term -hKt reflects the idea that when wealth (as measured by the capital stock) is higher, savings is lower, (i.e., wealthier people have less need to save for the future). Assume that production is given by the Solow model without technological change. Solve algebraically for the steady state capital stock. Show graphically how the steady state capital stock compares for an economy with h= 0 and another with h0.

Macroeconomics

This Is My Work And No I Do Not Intend To Submit A Tutor’S Work As My Own I Did Research As Well My The Selected

Question

This is my work and no I do not intend to submit a tutor’s work as my own. I did research as well my the selected

reading. However, to MY understanding multiple choices can be placed to one choice but it’s stated that only one goes to each scenario. I’m really confused and need help.

Each scenario below practices one of the 12 Principles of Economics. Match the principles to the appropriate scenario listed and justify your answer. A principle will only be used once, and not all principles are used.

The 12 Principles of Economics:

1. People must make choices because resources are scarce. 2. The opportunity cost of an item — what you must give up in order to get it — is its true cost. 3. How much decisions require making trade-offs at the margin: comparing the costs and benefits of doing a little bit more of an activity versus doing a little bit less. 4. People usually respond to incentives, exploiting opportunities to make themselves better off. 5. There are gains from trade. 6. Because people respond to incentives, markets move toward equilibrium. 7. Resources should be used as efficiently as possible to achieve society’s goals. 8. Because people usually exploit gains from trade, markets usually lead to efficiency. 9. When markets don’t achieve efficiency, government intervention can improve society’s welfare. 10. One person’s spending is another person’s income. 11. Overall spending sometimes gets out of line with the economy’s productive capacity. 12. Government policies can change spending. Each scenario below practices one of the 12 Principles of Economics. Match the principles to the appropriate scenario listed and justify your answer. A principle will only be used once, and not all principles are used.

Scenarios

1. Even though generally more expensive, energy efficient appliances and vehicles sell better with a rebate or tax credit. 2. Airlines will charge a fee for each additional suitcase you may want to take with you on a trip. 3. At a restaurant, when ordering an entrée, you get to choose two side dishes from a group of five side dishes. 4. Instead of growing your own food and making other necessities you decide to specialize in a particular profession and purchase things, even things that you would have not been able to make yourself. 5. There is an incredible variety of goods and services available at many different price points even though no single entity or government is deciding or dictating the market what to do. 6. In its effort to limit the effects of rising inflation, the Federal Reserve System reduces the quantity of money in the economy but sees an increase in unemployment 7. While consuming the same amount of farmers’ labor and capital the newly developed hybrid crops achieve twice the yields of the previous crops. 8. You have noticed that the same amount of money buys you fewer goods and services than it did a year ago. 9. You worked for extra pay on a holiday and therefore missed out on your neighbor’s’ barbeque. 10. Two major suppliers of powdered baby food formula are challenged by government on grounds of price fixing.

Macroeconomics

After California Was Hit By Deadly Forest Fires The Price Of Construction Materials Like Question 1

After California was hit by deadly forest fires, the price of construction materials, like

Question

1. After California was hit by deadly forest fires, the price of construction materials, like

plywood, in the southern California tripled in price. In response to customer complaints of ‘price gouging,’ the government considered imposing price regulations to insure that plywood would be sold at the same price that prevailed prior to the devasting wild fires.

Present a discussion, along with a graph, that identifies whether most economists would agree with this proposed action by government.

Macroeconomics

Hello I Need Help Figuring Out How To Solve This Question It Was Seen In Class But My Professor Didn’T Explain

Question

Hello, I need help figuring out how to solve this question it was seen in class, but my professor didn’t explain

how to get 2-4 so I am stumped.

The question is found below:

Consider the following numerical example using the Solow growth model. Suppose that

F(K, N) = zK 2/5N 3/5

where the capital depreciation rate is d = 10%, the savings rate is s = 0.25, the population growth rate is n = 7.50%, and the productivity is z = 1.5

1. Find the steady state per-capita capital stock (k*), output per capita (y*), and consumption per capita (c*).

2. Assume the economy is in the steady state of Question 1 and the government wants to implement a policy that will increase the long run per capita capital by 10%. Determine the percentage change in the population growth n that is required to achieve this goal.

3. Assume the economy is in the steady state of Question 1 and the government wants to implement a policy that will increase the long run per capita output by 10%. Determine the percentage change in the productivity z that is required to achieve this goal.

4. Assume the economy is in the steady state of Question 1 and the government wants to implement a policy that will increase the long run per capita consumption by 10%. Determine the percentage change in the savings rate s that is required to achieve this goal and get a higher level of per capita capital for the next generation.

Thank you in advance.

Macroeconomics

1 Suppose An Economy Is Experiencing Higher Inflation Rate As Well As A Recessionary Gap Using The Policy

Question

1. Suppose an economy is experiencing higher inflation rate as well as a recessionary gap. Using the policy

reaction function, explain whether the Reserve bank will increase or decrease the interest rate?

2. Explain the effect of an increase in imports on the equilibrium output and inflation in the AD-AS model. Carefully distinguish between the short run and the long run. Would this affect the potential output? Why/Why not?

3. Suppose capital in Country A increases from 100 in 2017 to 200 in 2018. Explain the effect of this increase on real GDP, real GDP per capita and average labour productivity

Macroeconomics

My Problem And Answer Is Posted Below My Question Is

Is output ambiguous and is the relation to investment then

Question

My problem and answer is posted below. My question is; Is output ambiguous and is the relation to investment then

also ambiguous?

Problem: Use the IS-LM model to answer this question. Suppose there is a simultaneous increase in government spending and reduction in the money supply. Explain what effect this particular policy mix will have on output and the interest rate. Based on your analysis, do we know with certainty what effect this policy mix will have on investment? Explain.

Answer:

Taking each piece independently:

An increase in government spending would be a fiscal expansion that would shift the IS curve to the right. The LM curve would not shift. With the shift right in the IS curve, output increases and the interest rate is unchanged.

A reduction in the money supply would be a monetary contraction that would increase the interest rate. The IS curve does not shift. The LM curve shifts upward representing a higher interest rate and a decrease in output.

Now looking at these happening simultaneously, we essentially combine these results and we know that

Output is unknown or ambiguous since the increase in gov. spending would increase output while the reduction in money supply would decrease output.

Interest rate would increase.

We don’t know with certainty what effect this policy mix will have on investment. The effect on investment is unknown because investment is dependent on output and interest rates. Higher interest rates imply that there is a decrease in the incentive to invest in the short run but since output is ambiguous, we’re unsure if there will be lower sales and hence lower investment or higher sales, thus higher investment. Therefore, the effect on investment is ambiguous or unknown.

Macroeconomics

Suppose That France And Denmark Both Produce Fish And Olives France’S Opportunity Cost Of Producing A Crate Of

Question

suppose that France and Denmark both produce fish and olives. France’s opportunity cost of producing a crate of

olives is 3 pounds of fish while Denmark’s opportunity cost of producing a crate of olives is 11 pounds of fish.

By comparing the opportunity cost of producing olives in the two countries, you can tell that has a comparative advantage in the production of olives and has a comparative advantage in the production of fish.

Suppose that France and Denmark consider trading olives and fish with each other. France can gain from specialization and trade as long as it receives more than of fish for each crate of olives it exports to Denmark. Similarly, Denmark can gain from trade as long as it receives more than of olives for each pound of fish it exports to France.

Based on your answer to the last question, which of the following prices of trade (that is, price of olives in terms of fish) would allow both Denmark and France to gain from trade? Check all that apply.

2 pounds of fish per crate of olives

13 pounds of fish per crate of olives

6 pounds of fish per crate of olives

4 pounds of fish per crate of olives

Macroeconomics

When The Central Bank Controls The Interest Rate A Rise In The Price Target Will In The Short Run

Question

When the central bank controls the interest rate, a rise in the price target will, in the short run,

cause:

Select one:

a. an increase in the nominal wage.

b. the wage setting curve to shift downward.

c. the AD curve to shift leftward.

d. the price setting curve to shift down.

e. the wage setting curve to shift upward.

A comparison of the average growth rates for the periods 1970-2006 and 1996-2006 for Australia indicates that:

Select one:

a. the recent increase in average growth rates is due to large increases in capital formation.

b. the average growth rate has increased in the more recent period.

c. the recent increase in average growth rates is due to the fact that Australia is a lucky country.

d. the average growth rates are basically the same.

e. the average growth rates have decreased.

Assume that the economy is initially operating at the natural level of output. An increase in the minimum wage will cause:

Select one:

a. an increase in the real wage in the medium run.

b. a reduction in the real wage in the medium run.

c. no change in the nominal wage in the medium run.

d. ambiguous effects on the real wage in the medium run.

e. no change in the real wage in the medium run.

Macroeconomics

My Question Please Read The Question And Answer Below Plus See Attached I’M Wondering If We Know The Effect On

Question

My Question: Please read the question and answer below plus see attached. I’m wondering if we know the effect on

investment or if it’s unknown?

Question 1. Based on your understanding of the IS-LM model, graphically illustrate and explain what effect a reduction in consumer confidence will have on output, the interest rate, and investment.

My Answer: Decreases in consumer confidence would shift the ZZ curve down to ZZ’ as shown below representing a decrease in demand and output.. The IS curve would shift left representing lower output and lower interest rate (as shown below). The effect on investment is unknown because investment is dependent on output and interest rates.



Macroeconomics

*The Question I’M Working On And My Answer Are Below My Question To You Is

can output be restored by lowering

Question

*The question I’m working on and my answer are below. My question to you is; can output be restored by lowering

the interest rate causing a downward shift in the LM curve and thus increasing output?

Question: Graphically (i.e., using the IS-LM model) illustrate and explain what effect an increase in default-risk premium (x) will have on the equilibrium output. How can we restore the output to its original level following this change?

Answer: Increase in default-risk premium (x) will make investing in assets riskier causing a decrease in investment demand. The IS curve shifts to the left showing interest rate and output both decreases. Output can be restored by lowering the interest rate causing a downward shift in the LM curve and thus increasing output.

Macroeconomics

My Question Is On ‘Part B’ Below I’M Wondering If I Picked The Right Numbers For Income Change And

Question

My question is on ‘part b’ below. I’m wondering if i picked the right numbers for income change and

multiplier. thanks!

1. Suppose the United States economy is represented by the following equations:

Z = C + I + G ; C = 500 + .5YD ; T = 600; I = 300;

YD = Y – T ; G = 2000

a. Given the above variables, calculate the equilibrium level of output.

Y = C+I+G

= 500 + .5(Y-600) + 300 + 2000

=2500 + .5Y

.5Y = 2500

Y = 5,000

Equilibrium level of output is 5,000

b. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output? How much does income change as a result of this event? What is the multiplier for this economy?

Y = C+I+G

= 500 + .5(Y-600) + 300 + 1900

=2400 + .5Y

.5Y = 2400

Y = 4,800

Equilibrium level of output is 4,800

Income changes by 200

Multiplier is .5

Macroeconomics

Read The Article By Carroll Requiem For The Representative Consumer? Aggregate Implications Of

Question

Read the article by Carroll Requiem for the Representative Consumer? Aggregate Implications of

Microeconomic Consumption Behavior and answer the following questions.

1. What is heterogeneity?

2. What is homogeneity?

3. What is precautionary savings?

4. How does MPC change as the wealth level of consumers change?

5. What is representative consumer?

6. What is a typical consumer?

7. What is the difference in wealth level for typical versus representative consumers?

8. What is the difference between patient and impatient consumers?

9. Compare the wealth level of patient and impatient consumers (the same, different – based on the article)

10. What is idiosyncratic risk?

Macroeconomics

EU crises from microeconomic point of view and future of EU

European countries that have constituted the EU have also been set to operate under common currency. the euro, making economic transactions between and among member states easy and favorable. This is more so because the member states do not face currency fluctuations in terms of foreign exchange, making international business prior to the member states favorable across the EU region.

Though the current notion of the EU sounds simple in the domain of other countries in the world, the history behind the formulation and implementation of the EU is rich. The establishment of the European Union was not easy, taking into account that it required prior organization and unique treatment of variables that would operationalize the union. Enormous challenges characterized the establishment of the union, but as time went by, challenges were overcome and smoothening of the operational grounds achieved. The current success of the EU has been achieved over a significant period of time, within which diversity and dynamism have adopted to aid the process. However, the EU is not without its economic problems. The EU has been characterized by micro and macroeconomics problems in its economic and financial context. These problems will be evaluated in this paper alongside the future of the EU, in the context of the euro, enlargement of the EU and the economic characteristics therein.
A Brief History of the EU
Efforts to unite the European countries began in the twentieth century after the Second World War. Significant success was first realized in the year 1949 when some European countries began the uniting process under the umbrella of Council of Europe. One year later, a community by the name European Coal and Steel improved their cooperation and established a treaty that brought together six nations (Roland, 2005, Ch. 3). These nations made up the founding states of the EU, and even today they are recognized for this role. In the 1950s, a more pressing need to have the European nations emerged. This was during the cold war at the time, which saw the Eastern side of Europe divided from the Western side. Protests that characterized the cold war contributed to this division, raising a concern about the unification of the European community. In order to unite the two sides, the Rome Treaty was signed in the year 1957, allowing for the creation of European community that was at the time called the European Economic Community (Roland, 2005, Ch. 3). With the establishment of the community, people, goods and services could be moved across borders in the entire European community. As time went, more and more countries requested membership, thereby making the community grow larger and larger each year. The growth and development of the community necessitated the presence of a single market among the member states. Provisions of law were enacted to aid this process. Eventually, in the year 1989, the Eastern side of Europe was united with the Western side when the boundary between the two sides was eliminated. Since then and over the years, the united European community has grown larger and stronger with the incorporation and integration of more member states. The Modern EU The years between 1990 and 2000 were characterized by free practices of the single market

Macroeconomics EC 211

Macroeconomics Assignment EC 211 QUESTION ONE – PERCENTAGE GROWTH IN NORMINAL AND REAL GDP for the years 1991 – 1997 YEAR Real GDP (in billions of Dollars per Year)
Nominal GDP (in billions of Dollars per Year)
% Growth in Real GDP
% Growth in Nominal GDP
U.S. Population (in Millions)
Real GDP per Capita
1990
6,136.3
5,743.8

—-
249.9
24,555.02
1991
6,079.4
5,916.7
-0.9%
3%
252.6
24,067.3
1992
6,244.4
6,244.4
2.7%
5.5%
255.4
24,449.49
1993
6,389.6
6,558.1
2.3%
5%
258.1
24,756.3
1994
6,610.7
6,947.0
3.5%
5.9%
260.6
25,367.2
1995
6,742.1
7,255.4
1.9%
4.4%
263.0
25,635.36
1996
6,928.4
7,636.0
2.8%
5.2%
265.5
26,095.66
1997
7,191.4
8,083.4
3.8%
5.9%
267.9
26,843.59
Real GDP per Capita is the Total GDP dividend by the whole population of the country.
GRAPH
THE GRAPH OF THE % Growth in Real GDP AND % Growth in Nominal GDP FOR THE YEARS 1991 – 1997
QUESTION TWO
Figure 1THE RELATION BETWEEN THE UNEMPLOYMENT RATE AND THE % CHANGE IN THE REAL GDP FOR THE YEARS 1981 -1995
QUESTION 3
1. What was the inflation rate as measured by GDP deflator in 2002 and 2003
The inflation rate = (current Year’s GDP Deflator – Previous Year’s GDP Deflator)/ Previous Year’s GDP Deflator x 100
2002 – (103.9 – 102.4) / 103.9 X 100 = 1.44%
2003 – (105.7 – 103.9) / 105.7 X 100 = 1.70%
2. Description of the inflation rate based on GDP deflator
The GDP deflator is the price index that is used to measure the market basket that is made up of a group of goods that make up the GDP. Inflation rate as measured by the GDP deflator shows the rate of price change in the whole economy combined (FIU, nd).
3. Description of the inflation rate based on CPI
CPI which is the Consumer Price Index is used to indicate the changes that takes place in the retail prices of the selected commodities and services which a common group of people uses or purchases. Thus the index is used to reflect changes in the final prices of the key commodities and services that are consumed by a substantial number of peoples in a selected market or community. Inflation rate is the rate of the changes of the prices of the consumer goods (FIU, nd). The calculation of the inflation based on the CPI is where the inflation rate is tabulated based on the changes in the prices of the key commodities or the commodities that are used or purchased by the majority of the population.
References
Florida International University, FIU, Practice Problems for Calculation of Real GDP, Real Income, CPI and GDP Deflator, nd. Web. 6 March. 2013.

Business cycle

HW4b Calibrated Business Model Calibrated business model is a concept applied to the selection of constraint values due to macroeconomic confirmation and compares the model’s calculations concerning the variances and co-variances of different series with those in the statistics (Romer 217-220). The methodology entails the estimation of casual or unrelated variances, which are quantified to confirm the existence of a historical data. This implies that the model uses real-business concepts against empirical values to ascertain the various sequences in the data. Calibration imposes models on macroeconomic disciplines for planning purposes and the detection of errors. For instance, the choice of the parameter values depends on the macroeconomic evidences available for comparison purposes (Romer 217-220). It is also apparent that the calibration model can result in the statistical rejection of adoption of a concept in business operations. This is because most models are always difficult to interpret and a model that fits the data properly, within different dimensions, may be statistically rejected if one aspect is omitted (Summers 129-148). A model may still be ignored if the data is consistent with a wide variety of options.
The models are calibrated to ensure that they undergo testing via the formal econometric methods. This is normally done through the identification of available evidence against the variances of other data in the series. For instance, the comparison of labor against capital and output can adopt the calibrated model (Romer 217-220). This means that government intervention and technological components do not apply in the final determination of outputs. The calibration is different from other models like the Solow theory that assumes the prevalence of technology in productivity. However, an alternative model for calibration is the proper assessment of fully specified models in which the researchers determine models using macroeconomic evidences (Romer 217-220). This focuses on the main building aspects or through the evaluation of the model’s consistency with other statistics.
According to Summers (p. 129-148), calibration model enables economists to apply different concepts in the interpretation of their business performance. The historical data comparison helps in speculation purposes in which a firm can change its methods to suit the trend. This is done through the relation between variables and independent factors present in the industry (Summers 129-148). As a result, the real-business cycle model relies on assumptions that differentiate it from other methods, such as no government involvement. The reality is that government is a vital player in economic decisions, but economists do not want to depend on their policies.
Conclusion
The application and testing of theories, and calibrated business cycle model is among the practical concepts adopted by economists. It involves the comparison of variance and co-variance data with the historical sequences in the statistics. Calibration imposes models on macroeconomic disciplines for planning purposes and the detection of errors. The performance of calibrated business-cycle models is through the identification of available evidence against the variances of other data in the series. This is an indication that the approach is favorable for various applications, such as the provision of quality analysis of the performance of different variances. As a result, calibration business-cycle model uses real-business concepts against empirical values to ascertain the various sequences in the data.
Works Cited
Romer, David. Advanced Macroeconomics. New York: McGraw-Hill Higher Education, 2010.
Print.
Summers, Lawrence H. "The Scientific Illusion in Empirical Macroeconomics." Scandinavian
Journal of Economics 93.2 (1991): 129-148.

Macroeconomics

Macroeconomics – Economic Growth The Chinese economy has been identified by a rapid growth within the past decade. Its advancements have been driven by wages, increased consumer markets and investments (China Central Television 2014). Other factors include social, political, technological and economic factors. However, leadership has been the key factor that has led to economic development in China. It has adopted both capitalist and socialist ideologies in its economy. To initiate economic development from the countrys roots, China has focused on regional developments that later contribute to the countrys economy. Most of the regional developments have been caused by local and international investments. Research has placed China among the top countries with increased industrial developments. Economic leaders have ensured friendly policies so that investors can start businesses in local areas. Finance has also been offered to local investors with business ideas through the sale of bonds by local governments.
The regions act as economic blocks where production and trade is regulated (China Central Television 2014). Free trade and a large capital and human resource have contributed to most of the economic developments in China. Industries in these regions range from electronic companies to designer clothing firms. They provide job to locals leading to middle and upper class lifestyles. China’s high population has been advantageous in the provision of local markets (China Central Television 2014). Most of the produced goods are sold locally while the national government invests in exports as a source of income. Reliance on internal sources of raw materials has also enhanced the country’s economic stability because economic meltdowns in other countries do not cause a chain reaction. Despite its high population, presence of skilled labor and investment programs has led to job creations leading to better lifestyles that are a sign of economic development.
Reference
China Central Television. (2014, May 29). China pursuing coordinated regional economic development – CCTV News – CCTV.com English. China pursuing coordinated regional economic development – CCTV News – CCTV.com English. Retrieved May 30, 2014, from http://english.cntv.cn/2014/05/29/VIDE1401321122357644.shtml

Summary on the following 3 readings

International relations Wright denies the existence of the theory of IR based on the principles of the methodology of the study of IR and the conceptual system that offers unified explanations of international occurrences. An initial glance according to Wright is that the speculation of relations among states is typically the scope of the political theory. As such, wrights propose various arguments against the existence of a theory in IR. Firstly, to be considered separate from mainstream political theory, it implies that theories of IR will have no classical bases making them be built away from pre-existent political theory thinkers such as Machiavelli and Plato. The speculation about the society of states that tends to shape the international law according to Wright explains the scene of theories of IR prior to 1914. The international law was the most vital of the reminiscences of theory of IR during that period (Wight 16)
Secondly, Wright opines that theories of international relations are marked by not only paucity but rather with intellectual and moral poverty. Wright highlights the unique poverty pertaining the imposition of the autonomous state and the notion of progress. The imposition of sovereign state argument is explainable via the state explanation and jurisdiction. As such, the balance of power cannot be a precise tool due to its ambiguity. Wright further provides that such hegemonic thoughts developed in the 20th C as a result of theoretical vacuum. Nevertheless, the theories could not establish themselves due to the lack of feasible situations that could cause them to happen. As such, the three determining phenomena to the international system cannot be described by an international thought, rather through domestic viewpoints. He provides that the nature of theories of IR coupled with the intellectual and political roles performed by the IR schools of thought are very similar to the nature of typical political theory. Of interest to the theorist is the recent bias to explicit theoretical reflection about IR being a definite measure of the importance of IR. As such, he provides the ultimate theoretical and political justification of the increased interest in IR. He argues that the threats stemming from the unresolved political challenges, people have come to think more in terms of a supranational community, a global government and political structures that culminate to the nation-state. Consequently, he provides an exemplary reflection of the political challenges whose solutions need functioning structures and organizations (Wight 20-35)
Morgenthau provides an insight into the world of Wright in his un-subscription from the theories of IR. Taking an internal approach to Wright’s arguments. Morgenthau theorizes that the belief in progress and the intellectual prejudice imposed by the sovereign state are the most distinguished reasons for Wrights negative perception of IR theories (Morgenthau 35-48).
Kenneth’s realistic opinion evolved from the liberal challenge and attempt to cure the defects of the classical realism by Morgenthau. He introduces a more scientific approach in which he strives avoid any philosophical discussion of the nature of the humans. Rather his theory is based on international politics analogous to macroeconomics. Kenneth argues that nations in the global front act as firms in a domestic market having similar underlying interest, survival. At the international front, the ecosystem of state’s actions is determined by the idea that a fraction of states gives preference survival at the expense of other ends in the short run. Such states according to Kenneth, act with relative efficiency to attain such ends (Kenneth)
Works Cited
Morgenthau, Hans J. “The Intellectual and Political Functions of a Theory of International Relations,” in Politics in the 20th Century, Vol. I, “The Decline of Democratic Politics,” Chicago: The University of Chicago Press. (1962): 35-48, 6
Waltz, Kenneth N. Theory of International Politics. Waveland Press, 2009.
Wight, Martin. "Why is there no International Theory?." 1995 (1966): 15-35

Math project

Monday Tuesday Wednesday Thursday Friday 8.30 ECO2142 C Macroeconomic Theory Francesca Rondina HGN 302 10.00
ECO2142 C
Macroeconomic Theory 1
Francesca Rondina
HGN 302
11.30
ECO 1102D
Introduction
to Macroeconomics
David Gray
UCU AUD
1.00
ECO 1102D
Introduction
to Macroeconomics
David Gray
UCU AUD
2.30
ECO2117 C
Introduction to Economics of Development
Geranda Notten
TBT 333
ECO 1302 A Contemporary Macroeconomics Issues
CBY C03
ECO 1104 G
Introduction To Microeconomics
Gordon Lenjosek
ART 033
4.00
ECO 1302 A Contemporary Macroeconomics Issues
CBY C03
ECO 1104 G
Introduction To Microeconomics
Gordon Lenjosek
ART 033
ECO2117 C
Introduction to Economics of Development
Geranda Notten
TBT 333
From the schedule above, I would not have early morning classes except for the Macroeconomic Theory 1 class on Thursdays. I chose these courses because of the timing of the classes, which makes my schedule flexible. My classes spread throughout the week with two classes daily except for Friday when I have only one class. Having one class on Friday gives me enough time to chill with friends and welcome the weekend. Moreover, my latest classes end at 5.30 p.m. I do not have evening classes and I can spend my evening time playing soccer with friends. The tough decision I had to make on my schedule was taking ECO1102 D and ECO 2117 C. The two care consecutive classes and the venues are some distance apart. However, I would overcome the distance issue by using my bike during that time.
Work Cited
"Search Tool for Available or Cancelled Courses."&nbsp.Course Timetable. Web. 12 Nov. 2014. .
Top of Form
Bottom of Form
"Maps."&nbsp.Home. Web. 12 Nov. 2014. .

In conditions of perfect capital mobility and floating exchange rate fiscal policy is likely to be ineffective while monetary policy may be effective in achieving internal and external balance

This paper shall discuss the Mundell-Fleming Model as applied to a specific condition of floating exchange rates in an open small economy and perfect capital mobility, with special attention to how fiscal and monetary policies impact the macroeconomy. The writer shall attempt to test and explain the proposition that “fiscal policy is likely to be ineffective, while monetary policy may be effective, in achieving internal and external balance. "
The Mundell-Fleming model uses the Hicksian IS and LM framework to analyze the effectiveness of fiscal and monetary policies for small open economies under fixed and flexible exchange rates, assuming perfect capital mobility. The seed of the model is found in his published article (Mundell 1962), which later appeared in his book in 1968 and a collection of macroeconomics essays in 1970.
An attempt will be made to discuss some basic concepts relevant to the topic with the aim of leading the reader towards a clearer understanding of the premises and the relationships that underpin the effectiveness, or lack thereof, of fiscal and monetary policies in bringing about the desired changes that would result in an internal and external balance.
The problem faced by many economies concerns the achievement of internal stability and balance of payments equilibrium. Mankiw (1997) defines stabilization policy as public policy aimed at keeping output and employment at their natural rate levels. Fiscal and monetary policy can be used as instruments to attain these objectives if capital flow responds to differences in interest rates among the economies. An appropriate policy mix should be one where a country with balance of payments surplus and facing inflationary pressures will attempt to ease the monetary situation through selling in open market operations and at the same time raising taxes, thereby reducing money supply. A deficit country with unemployment problem or less than full employment will reduce

The Principles and Motivating Force of Microeconomics

Microeconomics analyzes factors affect prices and how these prices affect the number of goods or services supplied to or from a given market. Moreover, Microeconomics also examines factors affecting the demand for certain goods and services within a particular market domain.

On the other hand, macroeconomics often engulfs the sum total of all the economic activities related to economic growth, unemployment, and inflation. Notably, microeconomics often deals with economic policies that usually influence or affect a nation. Therefore, microeconomics is the aforementioned phenomenon of the economy. Some of the areas of the economy affected by microeconomics include the taxation levels of a particular country. For instance, the emergence of Lucas’s analyzes leads to the introduction of the modern macroeconomic theory that is defined upon the basic assumptions of micro-level behavior.

Among the main aims or objectives of the microeconomics is to analyze the market mechanisms that define relative prices of goods and services as well as determining the allocation of limited resources within the many alternative and competitive users and uses. Additionally, the microeconomics often analyzes the market failure especially when the market has failed to produce desirable and efficient results. In such a situation, the market analyzes deploy the use of the microeconomic phenomena to describe the theoretical conditions that are needed for perfect competitions. The most desirable areas of study in the microeconomics include the market symmetric information, general equilibrium, uncertainty principles, and applications of the economic game theory. Furthermore, microeconomics helps in analyzing product elasticity within a market system.

The supply and demand theory often assumes a market is ever perfectly competitive. This means that there are numerous sellers and buyers within a market domain but none of them has the capacity to essentially influence the prices of services or goods within that market domain.

Wars and Interest Rates in the United Kingdom

Wars and Interest Rates in the United Kingdom Mankiw gives an insight into the relationship that exists between interest rate and other macro-economic variables. With a view to the economic turbulence that United Kingdom has gone through especially during the wars in Europe between 1730-1920. It is important to note that interest rate is a common denominator as far as monetary and fiscal policies are concerned. Different schools of thoughts explain the feasibility of either monetary policy of fiscal intervention towards regulation of interest rate which in turn dictates level of investment versus savings. The classical approach takes investment to be a function of interest rate directly whiles the Keynesians economists note this relationship to be a product of multiplier effect (Mankiw 73).
There is significant evidence that the UK economy in the 1920s was emphatic on the desire to maintain the value of Sterling at its pre-war level of $4.86. This political move survived during the war but at the end US dollar gained prominence leading to significant inflation. It is explained that inflation affects interest rates since it raises general prices of goods and services. The case of United Kingdom during the specified period that was marred with war gives a clear picture of the influence of interest rate in the aggregate economic direction of the country. Macroeconomic policies on fixed exchange rate policy indicated that fiscal instruments are at play. Mankiw generally discusses the significance of interest rate in determining level of investment and subsequent rate of economic growth.
Work cited
Mankiw, N G. Principles of Macroeconomics. Mason, OH: South-Western Cengage Learning, 2014. Print.

Business Economics

Business Economics Question One Among the very many benefits derived from capitalist economy in U.S. are the principles of equality and secondly freedom. U.S. upholds the rule of equality among its citizen with regards to services provision, the rule of law and justice. All these have contributed to a fair society where everyone has an equal share of the available resources and are treated with dignity. Furthermore the American freedom hit the bar to be paramount and highly profound. This creates a free community in which one does what he chooses to at will and this result to individual productivity and room for self-development to constitute the national economic development at large.
Question Two
An average American and Indian live relatively different lives. This is due to fact that the population level hits more than 300 million in India. The high population rate has strained the economic and natural resources of the country to an extent that almost 30% of the India’s population live below the poverty line. Poverty remains a chronic condition in India (Zhu, 2008). The great industrialization in the U.S. has put high rate of efficient production in relation to a manageable population levels makes the living standards of the American citizens to be at par.
Question Three
Education –the change in American education system that is practical oriented is an avenue of economic prosperity as the citizens specialize in areas of best in ability and interest to hasten the production levels and efficiency in such fields rather theoretical aspects that contribute less to the general output (Cheneryet al., 2001).
Human resource expertise –this would entail experience and job specialization. The growing industrialization in the U.S. is a hub of experience gain and job specialization in creating efficacy and increased productivity among the people. Experience gained in the line of duty is resourceful to the development of the individuals.
Question Four
Consumer purchasing power (CPP) –the cost of a unit good that a dollar can purchase has a great impact on the lives of the individuals. This bundle of good that one can have in a basket would impact on his social well-being as this entails what limits to consume with the ability to afford (Arnold, 2011).
Currency stability –the economic stability of the domestic currency with respect to the dollar is impacting so much on the lives of the individuals (D’Souza, 2008). When the local currency is stable enough there is certainty in doing business and its prospects can be estimated to project on the sustainability of the project.
References
Arnold, R. A. (2011).&nbsp.Macroconomics. Mason, OH: South-Western/Cengage Learning.
Chenery, H. B., Srinivasan, T. N., Behrman, J. R., Rodrik, D., Rosenzweig, M. R., Schultz, T.
P.,&amp. Strauss, J. (2001).&nbsp.Handbook of development economics. Amsterdam: North
Holland.
DSouza, E. (2008).&nbsp.Macroeconomics. Delhi: Pearson Education.
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Zhu, D. (2008).&nbsp.Improving municipal solid waste management in India: A sourcebook for
policymakers and practitioners. Washington, D.C: World Bank.
Bottom of Form

Introduction to Macroeconomics

A single estimate is then derived and published as the official estimate of GDP. There are two ways to measure the GDP, Real and the Nominal. Every country uses estimates of GDP in real terms as the international standard to measure growth in an economy. It is essential to follow a common standard to allow meaningful comparisons between different economies. The United Kingdom follows the international conventions and European Union guidelines.
This paper examines the GDP as a metric for measuring the health of an economy. It begins by analysing the distinction between the real and the nominal GDP and then goes on to elucidate the voids in using GDP as a sole quantifier of the national economy. It then suggests other alternatives and gives the relative merits of using other systems to access the state of the national economy of any country.
The GDP of every economy tends to rise over a period of time.
This rise in the size of the expenditure could be due to two reasons, either due to an increase in output or due to an increase in prices. If the GDP has risen because of more production of goods and services in the country then there is economic growth, but if the rise in GDP is due an increase in the prices of the goods and services. then the economy has experienced inflation and not growth in production. Economists have devised two ways to measure GDP these are the nominal GDP and the real GDP. The real GDP is the value of the GDP at constant prices using a given base year value. It excludes any inflation and reflects the changes purely in volume terms. thus giving the actual level of economic activity. It is estimated using chained volume measures. The nominal GDP gives the value of GDP at current prices, prices for which year the GDP is taken. Growth in nominal GDP reflects the effects of inflation, as well as real GDP growth. It reflects a change in value terms. For example, to calculate the value of 1999 nominal GDP, we will sum the value of all expenditures in 1999, using the prices that prevailed then. The real GDP would be calculated by taking the sum of the values of all the expenditures in 1999, but using the prices that prevailed in the base year (2003). When economists need to quantify inflation they take the ratio of nominal to real GDP and take its percentage. This then is called the GDP deflator.

Efficacy of GDP as a Measure.&nbsp.&nbsp.The famous economist S. Kuznets who is regarded as the creator of the concept of GDP &nbsp.&nbsp.defines it as the gross total of all the final production of goods and services, with it making no distinctions between transactions that add to the social welfare and those that don’t.&nbsp.

East Asian Economic Growth

5

1250

The global recession of 2008 also affected their economies, but their experiences in international trade are all worth studying because they derived much success in it. With these HPAE are subgroups such as the Four Tigers, namely Hong Kong, Singapore, South Korea, and Taiwan. Another group is the Newly Industrializing Economies (NIE) of Indonesia, Malaysia, and Thailand. China has a category all its own due to its size and communist influence. The NIE followed suit after the Four Tigers’ economies took off. Experts have analyzed how the HPAE have sustained their economic success and found that these countries were careful in maintaining stable macroeconomics. They also prioritized sharing the benefits of their economic growth with their citizens by providing them access to health care, education, and housing, so people were made to feel they were well taken care of. Such actions were successful in soliciting people’s support and confidence. In turn, the high rates of literacy produced in their people were attractive to foreign investors and multicultural firms. Another reason for their success is the promotion of their exported products while being open to imports. These countries believed that exportation provided the foreign exchange earnings they needed as well as encouraged businesses to be competitive in coming up with high-quality products to export while importation brought about new technologies and novel products to update their knowledge in skills. Income rates in these Asian countries are much higher than their Latin American counterparts. As opposed to them, the East Asian economy did not have high inequality in income and wealth at the beginning of their growth. The pattern followed what was known as “Kuznet’s curve”, which suggested equality first declines and then rises. The relative equality in these nations resulted from the characteristic sharing of wealth from economic success. Hence, the provision of basic needs as well as land reform, free public education, free basic health care and significant investments in rural infrastructure such as clean water systems, transportation and communication systems. The positive outcomes of such provision extend to the rise in business opportunities since the people have the purchasing power to support small- and medium-scale entrepreneurs which are locally based. This contributes to political stability and sustains the interest of businesses to invest in these countries on a long-term basis. The export push in the East Asian nations resulted in more than double their share in total world exports and total world manufactured exports. Such success was attributed to education policies favoring the advocacy of literacy spread in primary and secondary schooling. On top of that, HPAE nations endorsed export promotion policies that created an impetus for export businesses. For example, export financing credit and tax benefits were readily available in Japan and the Four Tigers for businesses that reach their export targets. Tariff-free access to imports of capital equipment needed in manufacturing is also provided. Such practices of export promotion connected with high rates of growth may be considered controversial in economics as well as sharing such export promotion strategies with other nations as it is likely to create trade conflicts since it may go against the rules of fair trade agreed to by the members of the World Trade Organization.

Introductory Economics (Macroeconomics)

If interest rates are forecasted to be low in an economy, then it makes productive investors believe that in the long run, cost of borrowing funds would be less. Under such circumstances, the rate of investments made in an economy would increase and level of economic productivity would also rise. Finally, a rise in the domestic product of a nation simply indicates a fall in unemployment rates. The Bank of England initially claimed under the regime of Forward Guidance Policy that it would not increase the lending interest rate above .5% in the long run, until the unemployment level in the country falls to 7% or below (BBC, 2014). Accordingly, such claims made by the Bank had succeeded in lowering the level of volatility in the market as well as enhancing the level of investments made in the country (BBC, 2014).
Nonetheless, governor of the bank had mentioned that it was required to revise the Forward Guidance Policy because such forecasts would generate excessive job opportunities in the nation, that would automatically increase the amount of money and hence, demand in the economy. ultimately carving the path of inflation in the long run (Howker and Malik, 2010). The Bank also claimed that in its revised Forward Guidance Policy, it would forecast several macroeconomic factors, apart from unemployment and interest rate. The bank asserted that it would increase the interest rate to 2% to stabilize the unusual growth of employments in the nation. Although Mark Carney claimed that the country would experience high growth from 2.8% to 3.4% in the recent years, he also added that the growth was “neither balanced nor sustainable” and way below the pre-financial crisis levels (BBC, 2014). With reference to such revised estimates for future, the risk adverse attitude of investors in the nation would fall to some extent. They would realize that they had overestimated stability of the economy

Current events report and analysis

Current events report and analysis Summary According to the estimates of the International Energy Agency the production of the oil of the United States has been on the rise. This increase in the production of the oil is much more than it was estimated by the economists. This has provided the company with a very strong capacity of oil. The consumption of the oil in the United States has also increased over the last year and the rate of increase is much more than that of the other large economies of the world. This increase resulted due to the increase in the demand in the petrochemical industries. As result of the increase in the supply of the oil, the price of the oil has gone down in the country. The demand for oil in the other oil consuming major countries like Spain and Italy had been due to the crisis that these countries have been experiencing. Thus among the other developed countries the both the consumption and the production of oil in the United States has been the highest (Norris 1).
In respect to the above article, the demand and supply model has been fit and the analysis has been done from the perspective of the oil prices of the United States. The diagram below depicts the demand and supply of oil in the economy of US. The downward sloping curve is the demand curve and the upward rising curves are the supply curves.
Figure 1: Demand and Supply Equilibrium
(Source: Samuelson and ‎ Nordhaus 57)
In the figure it can be seen that the initial supply curve of oil in the economy of US is given by S2 which was the supply of oil in the previous period. The demand and supply curve in the initial phase intersected at the equilibrium price of P2 and quantity Q2. In the present period the supply of oil in the economy increases and the new supply curve shifts to S1. Therefore at the same level of demand for oil in the economy the demand and supply curves intersect to form a new equilibrium the new equilibrium point is formed at the price P1 and at the quantity Q1.
If the macroeconomic policy of aggregate demand and supply is applied to the article above it can be found that the rise in the consumption has resulted in a push in the demand for oil. This in turn has increased the level of supply of oil in the economy.
(Source: Petri 231)
In the above figure the aggregate supply and demand curve has been drawn. The initial aggregate supply curve is AS. Due to the rise in the production of oil the new aggregate supply curve would be at AS1. The rise in the production of the oil has led to the fall in the prices. As a result the price level of the economy decreases. The spending of the people increases the aggregate demand in the economy. This results in the increase in the level of consumption in the economy. Therefore the real output of the economy goes up.
Works cited
Norris, Floyd. U.S. Oil Production Keeps Rising Beyond the Forecasts. The New York Times. 24 Jan 2014. Web. 30 Jan 2014. Samuelson, Paul A. and ‎ Nordhaus, William D. Economics. New Delhi: Tata McGraw-Hill Education. 2010. Print.
Petri, Fabio. General Equilibrium, Capital and Macroeconomics. Cheltenham: Edward Elgar Publishing. 2004. Print.

Macroeconomics Environment of Business

112750 Moreover the population and area of India is much larger than the combined area of all countries under EU. On the other hand there is the example of USSR breaking up into 14 smaller countries. Ruble was the currency of a unified USSR, but now the newly formed countries have come out with their own currencies while still accepting Ruble. This system as working fine as well. In fact success of any unified currency depends largely upon the sincerity and integrity of member states. In the case of EU the member countries don’t have a history of fierce rivalry or enmity like between Israel and Palestine (or other gulf countries), India and Pakistan or the cold war between US and USSR. So far each member has displayed maturity and commitment towards the unification move, recognizing the potential of unity for all. Moreover these are early days and initial hiccups are bound to crop up. To think that there should’ve been multiple currencies only because there have been such an arrangement in past means we’re not taking lessons from history. Think about the multiplicity of efforts and resources that are required to maintain two types of currencies simultaneously. Under such circumstances, if all 12 member countries use their own currency together with EMU, at times the chauvinistic feeling also crop up which may bring up the thought of putting one’s country’s currency over that of the unified currency (which in totality means nobody’s currency).

Chapter one

Book Review Book Review Macroeconomics 3rd Edition The most important lesson from this book is the economic model of trade-off. As an economist, I would like to point out that trade-off is a very crucial concept in business. As Paul Krugman and Robin Wells exclaim, it can determine the success or failure of any investment. The chapter convinces me that it applies the principle of opportunity cost which of course, plays a significant role in the decision-making process. This applies both at personal, corporate or national level (Blanchard, O., 2000).
I would like to say that the explanations given by these authors can be of great help to me. In my own capacity as an up coming entrepreneur, I would like to assert that it imparts decision-making skills on me. It enables me to understand the role of prioritization in business. Even if there may be lots of alternative opportunities to explore, these writers convince me that it is better to forgo many options and settle on the best alternative.
Such a skill can help me to understand my business environment, analyze the available resources before coming up with a well-thought investment to venture into. This is recommended because it is the most absolute way to ensure that I choose the most viable business which will not only make profits, but withstand the stiff competition in the market and expand in the long run (Blanchard, O.,2000). In conclusion, trade-off is paramount in the making of decision regarding any business. It imparts evaluation, managerial and creative skills necessary for the management of any business.
References
Blanchard, O. (2000) Macroeconomics. Upper Saddle River: Prentice Hall.

Causes of Unemployment and the Economic Schools of Thought

Unemployment prevalence is normally measured with what is normally termed as unemployment rate which is defined by expressing those out of labour force as a percentage of those who are in the force.
More often than not the unemployment rate has been used in economic studies where it may be applied to measure the state of macroeconomics. This paper seeks to argue out the proposition that unemployment within the labour market is primarily voluntary.
A number of causes for unemployment have been floated and these causes depend on the economic school of thought. The Keynesians and monetarists more often than not disagree on the causes of unemployment and as such, they also disagree on the best policies to address the issue of unemployment. For instance, the monetarists believe that by controlling inflation, economic growth and investments will be enabled and these will consequently lead to reduced unemployment rates. How do Keynesians address the issue of unemployment? The Keynesian believe that the best way of addressing unemployment is to smoothen out the business cycles by the manipulation of the aggregate demand (Hillier, 1991: pp157-159). Economic theories aside, the type of unemployment is purely dependent on the goods market situation. If for instance the sales are strictly tied to demand then the Keynesian type of unemployment results. However, if there is a limited production capacity then the ensuing unemployment is termed as classical unemployment.
The main types of unemployment include but are not limited to Frictional Unemployment, Seasonal Unemployment, Cyclical (Keynesian) unemployment, Structural unemployment and Classical unemployment among others. Frictional unemployment results when one transfers from one job to another. This is the same unemployment type experienced by the fresh graduates who are searching for a job.

Monetary Policy (Macroeconomics)

Reduction of the Federal Reserve’s Economic Value Program The reduction of the Federal Reserve’s Assets both in actuality and prospect has created substantial challenges to various emerging market economies. However, this change has been cited as inevitable in some case, but has caused huge criticism from various global markets. These changes are expected to have domestic as well as global impacts in economic systems (http://www.ny.frb.org, n.p).
According to William Dudely, the President and the CEO of the Federal Reserve Bank of the United States, such abrupt economic policies have a significant impact on social development within United States. One of the impacts could result from a spike in Treasury yield, creating a need to raise government spending. This has a direct impact on social development as it involves spending more tax-payer’s money (http://www.ny.frb.org, n.p).
In relation to societal issues impacted by the policy, the article indicates that such changes could spike up credit excesses leading to a scenario of financial instability as witnessed during the period of the Great Recession (http://www.ny.frb.org, n.p). The financial instability could be as a result of jeopardized debt ratios as well as increased amount of internal debts.
On the other hand, scaling back the Federal Reserve’s Economic value has a great impact on Emerging Market Economies (EME’s). To begin with, it would lead to the reduction of the Federal Reserve’s Liquidity Cushions on foreign exchange creating a scenario whereby foreign investors withdraw their investment capitals. In addition, it would lead to a scenario of jeopardized financial stability within foreign markets thus creating vulnerability in their levels of development (http://www.ny.frb.org, n.p).
Work Cited
"U.S. Monetary Policy and Emerging Market Economies – Federal Reserve Bank of New York." U.S. Monetary Policy and Emerging Market Economies – Federal Reserve Bank of New York. N.p., n.d. Web. 20 July 2014. .

ECONOMIC FORECASTING AT Bank OF GREEN

3rd July Economic forecasting at Bank of Green One of the major issues that are affecting the investors is the slow growth of GDP an aspect that results to low national demand as well as reduced consumers purchasing power. Additionally, the decline in the consumer confidence result to low demand for financial services implying that Bank of Green and Federal Reserve must take an action to restore the economy. In order to expand the investment thus increasing the job opportunities, the Federal Reserve must ensure that the Bank of Green has adequate funds to give as loan to the investors as well as customers. The bank Federal Reserve should make sure that the interest rate is maintained at an affordable rate in order to avoid inflation (The Federal Reserve 4). As a result, the investors will not only be able to borrow and expand their investment portfolio but also they will have confidence in the value of their pensions. The increase in the level of investment will ultimately create job opportunities for the household thus raising the income as well as the consumer spending (Jodi 3). As time goes by, the economy will be back in track leading to a raise in the level of consumer confidence.
On its part, the Bank of Green should ensure that it emulates appropriate changes on the products and services they are offering. For example, the bank should ensure that the products can be easily changed into liquid at a faster rate. In this way, the consumer will have adequate money at their disposal thus ensuring they easily access other products and services provided by the economy. The bank should also emulate extensive marketing of the products as a way of creating strong customer awareness.
Works Cited
Jodi B. What Is Macroeconomics? Available from http://economics.about.com/cs/studentresources/f/macroeconomics.htm
The Federal Reserve. The Feds Functions. Available from http://www.frbatlanta.org/pubs/frstructurefunctions/functions.cfm

Initially real interest rates in the United States England and Japan are all equal at 5 percent Then the

Question

Initially, real interest rates in the United States, England, and Japan are all equal, at 5 percent. Then the

central banks alter their policies, so that the American interest rate rises to 6 percent, the Japanese rate falls to 4 percent, and the British rate stays at 5 percent.

a) How would you predict that capital flows among the three countries would change?

b) Using supply and demand curves, show how the exchange rates are likely to change.

c) How do you expect the balance of trade in the three countries to change?

d) What quantitative relationship would you expect between the change in the capital flow and the change in the trade balance in each country?

JAPAN
8 x2
Leftward Shift .
INCREASE IN EXCHANGE
RATE .
DX
Quantity demanded
* * decreases.
Quantity
AMERICA
Rightward
Shift.
R2
-Et
DECREASE IN EXCHANGE
RATE
DI OP 2
* x Quantity
Quantity
demanded…
Macroeconomics

Initially real interest rates in the United States England and Japan are all equal at 5 percent Then the

Question

Initially, real interest rates in the United States, England, and Japan are all equal, at 5 percent. Then the

central banks alter their policies, so that the American interest rate rises to 6 percent, the Japanese rate falls to 4 percent, and the British rate stays at 5 percent.

a) How would you predict that capital flows among the three countries would change?

b) Using supply and demand curves, show how the exchange rates are likely to change.

c) How do you expect the balance of trade in the three countries to change?

d) What quantitative relationship would you expect between the change in the capital flow and the change in the trade balance in each country?

JAPAN
8 x2
Leftward Shift .
INCREASE IN EXCHANGE
RATE .
DX
Quantity demanded
* * decreases.
Quantity
AMERICA
Rightward
Shift.
R2
-Et
DECREASE IN EXCHANGE
RATE
DI OP 2
* x Quantity
Quantity
demanded…
Macroeconomics

1)We would expect which of the following to occur when the central bank conducts an open market purchase of

Question

1)We would expect which of the following to occur when the central bank conducts an open market purchase of

bonds?

Select one:

a. A decrease in reserves.

b. A decrease in the money multiplier.

c. An increase in reserves.

d. An increase in the money multiplier.

e. A decrease in central bank money.

2)Which of the following will occur when the central bank pursues expansionary monetary policy?

Select one:

a. A rightward shift in the money demand curve and a rightward shift in the money supply curve.

b. A leftward shift in the money demand curve and a rightward shift in the money supply curve.

c. A rightward shift in the money demand curve and a leftward shift in the money supply curve.

d. A leftward shift in the money demand curve and a leftward shift in the money supply curve.

e. None of the above.

3)An increase in the interest rate will cause:

Select one:

a. a decrease in the supply of central bank money.

b. a decrease in the demand for reserves.

c. a decrease in the demand for currency.

d. both A and C.

e. both B and C.

4)An increase in the budget deficit increasing the level of investment is known as:

Select one:

a. the crowding in of investment.

b. the crowding out of investment.

c. the crowding out of budget deficit.

d. the crowding out of output.

e. the crowding in of budget deficit.

5)A decrease in the reserve deposit ratio, θ, will most likely have which of the following effects?

Select one:

a. A rightward shift in the IS curve.

b. A leftward shift in the IS curve.

c. An upward shift in the LM curve.

d. A downward shift in the LM curve.

e. A downward shift in the IS curve and an upward shift in the LM curve.

Macroeconomics

1)We would expect which of the following to occur when the central bank conducts an open market purchase of

Question

1)We would expect which of the following to occur when the central bank conducts an open market purchase of

bonds?

Select one:

a. A decrease in reserves.

b. A decrease in the money multiplier.

c. An increase in reserves.

d. An increase in the money multiplier.

e. A decrease in central bank money.

2)Which of the following will occur when the central bank pursues expansionary monetary policy?

Select one:

a. A rightward shift in the money demand curve and a rightward shift in the money supply curve.

b. A leftward shift in the money demand curve and a rightward shift in the money supply curve.

c. A rightward shift in the money demand curve and a leftward shift in the money supply curve.

d. A leftward shift in the money demand curve and a leftward shift in the money supply curve.

e. None of the above.

3)An increase in the interest rate will cause:

Select one:

a. a decrease in the supply of central bank money.

b. a decrease in the demand for reserves.

c. a decrease in the demand for currency.

d. both A and C.

e. both B and C.

4)An increase in the budget deficit increasing the level of investment is known as:

Select one:

a. the crowding in of investment.

b. the crowding out of investment.

c. the crowding out of budget deficit.

d. the crowding out of output.

e. the crowding in of budget deficit.

5)A decrease in the reserve deposit ratio, θ, will most likely have which of the following effects?

Select one:

a. A rightward shift in the IS curve.

b. A leftward shift in the IS curve.

c. An upward shift in the LM curve.

d. A downward shift in the LM curve.

e. A downward shift in the IS curve and an upward shift in the LM curve.

Macroeconomics

If the U S government tried to raise the rate of national economic growth much higher than the growth rate of the

Question

If the U.S. government tried to raise the rate of national economic growth much higher than the growth rate of the

rest of the world’s economy, how would the international trade sector transmit inflationary pressures to the U.S. economy? If the rest of the world raised its growth rate to the high American level, would these inflationary pressures persist? Use supply and demand curves for the dollar to explain your answer. What do you conclude about the desirability of coordinating economic policies among trading partners?

Macroeconomics

If the U S government tried to raise the rate of national economic growth much higher than the growth rate of the

Question

If the U.S. government tried to raise the rate of national economic growth much higher than the growth rate of the

rest of the world’s economy, how would the international trade sector transmit inflationary pressures to the U.S. economy? If the rest of the world raised its growth rate to the high American level, would these inflationary pressures persist? Use supply and demand curves for the dollar to explain your answer. What do you conclude about the desirability of coordinating economic policies among trading partners?

Macroeconomics

1)Assume that investment does not depend on the interest rate A decrease in government spending will cause which

Question

1)Assume that investment does not depend on the interest rate. A decrease in government spending will cause which

of the following for this economy?

Select one:

a. An increase in output.

b. An increase in the interest rate.

c. A decrease in investment.

d. No change in investment.

e. An increase in investment.

2)An increase in the aggregate price level, P, will most likely have which of the following effects?

Select one:

a. A rightward shift in the IS curve.

b. A leftward shift in the IS curve.

c. An upward shift in the LM curve.

d. A downward shift in the LM curve.

e. A downward shift in the IS curve and an upward shift in the LM curve.

3)An increase in consumer confidence will likely have which of the following effects?

Select one:

a. A rightward shift in the IS curve.

b. A leftward shift in the IS curve.

c. An upward shift in the LM curve.

d. A downward shift in the LM curve.

e. A rightward shift in the IS curve and an upward shift in the LM curve.

4)For a closed economy, which of the following conditions must be satisfied for equilibrium to be maintained?

Select one:

a. Y = Z.

b. S = I.

c. X = Z.

d. G = T.

e. X = IM.

5)In the IS-LM model, an increase in the money supply will cause an increase in which of the following variables?

Select one:

a. Output.

b. Consumption.

c. Investment.

d. All of the above.

e. None of the above.

Macroeconomics

1)Assume that investment does not depend on the interest rate A decrease in government spending will cause which

Question

1)Assume that investment does not depend on the interest rate. A decrease in government spending will cause which

of the following for this economy?

Select one:

a. An increase in output.

b. An increase in the interest rate.

c. A decrease in investment.

d. No change in investment.

e. An increase in investment.

2)An increase in the aggregate price level, P, will most likely have which of the following effects?

Select one:

a. A rightward shift in the IS curve.

b. A leftward shift in the IS curve.

c. An upward shift in the LM curve.

d. A downward shift in the LM curve.

e. A downward shift in the IS curve and an upward shift in the LM curve.

3)An increase in consumer confidence will likely have which of the following effects?

Select one:

a. A rightward shift in the IS curve.

b. A leftward shift in the IS curve.

c. An upward shift in the LM curve.

d. A downward shift in the LM curve.

e. A rightward shift in the IS curve and an upward shift in the LM curve.

4)For a closed economy, which of the following conditions must be satisfied for equilibrium to be maintained?

Select one:

a. Y = Z.

b. S = I.

c. X = Z.

d. G = T.

e. X = IM.

5)In the IS-LM model, an increase in the money supply will cause an increase in which of the following variables?

Select one:

a. Output.

b. Consumption.

c. Investment.

d. All of the above.

e. None of the above.

Macroeconomics

6 People had been expecting the price level to be 140 but it turns out to be 138 Johnson Family Restaurants

Question

6. People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants

increases the number of workers it employs. What could explain this?

a. both sticky price theory and sticky wage theory b. sticky price theory but not sticky wage theory

c. sticky wage theory but not sticky price theory

d. neither sticky wage theory nor sticky price theory

Macroeconomics

6 People had been expecting the price level to be 140 but it turns out to be 138 Johnson Family Restaurants

Question

6. People had been expecting the price level to be 140 but it turns out to be 138. Johnson Family Restaurants

increases the number of workers it employs. What could explain this?

a. both sticky price theory and sticky wage theory b. sticky price theory but not sticky wage theory

c. sticky wage theory but not sticky price theory

d. neither sticky wage theory nor sticky price theory

Macroeconomics

ECC1100 1 In country A Tim bought a car for $40 000 in 2018 This

Question

ECC1100

1.In country A, Tim bought a car for $40,000 in 2018. This

transaction would lead to a $40,000 increase in country A’s GDP in 2018.

(Explain whether you agree or disagree with the statement. Give TWO reasons.)

2.If the price of bread increases by 10%, you will be necessarily worse off. Explain whether you agree or disagree with the statement.

(What are the assumptions behind your arguments?)

3.Explain the effect of an increase in participation rate on unemployment rate.

Macroeconomics

ECC1100 1 In country A Tim bought a car for $40 000 in 2018 This

Question

ECC1100

1.In country A, Tim bought a car for $40,000 in 2018. This

transaction would lead to a $40,000 increase in country A’s GDP in 2018.

(Explain whether you agree or disagree with the statement. Give TWO reasons.)

2.If the price of bread increases by 10%, you will be necessarily worse off. Explain whether you agree or disagree with the statement.

(What are the assumptions behind your arguments?)

3.Explain the effect of an increase in participation rate on unemployment rate.

Macroeconomics

4 Suppose that we have a standard Solow model with a CobbDouglas production function The central equation of

4. Suppose that we have a standard Solow model with a. Cobb—[buglas produc—
tion function. The central equation of the model is as follows: km 2 SAFE? + (l. – {guilt
Consumption per worker is given by: q=[1-5)Akf. {a} Solve for an expression for the steady state capital stock per worker. In
doing so1 assume that the level of productivity is fixed at some value A. {h} Use your answer on the previous part to solve for an expression for steady state consumption per worleer. {c} Use calculus to derive an expression for the a which maximizes steady state consumption per worker.
Macroeconomics

4 Suppose that we have a standard Solow model with a CobbDouglas production function The central equation of

4. Suppose that we have a standard Solow model with a. Cobb—[buglas produc—
tion function. The central equation of the model is as follows: km 2 SAFE? + (l. – {guilt
Consumption per worker is given by: q=[1-5)Akf. {a} Solve for an expression for the steady state capital stock per worker. In
doing so1 assume that the level of productivity is fixed at some value A. {h} Use your answer on the previous part to solve for an expression for steady state consumption per worleer. {c} Use calculus to derive an expression for the a which maximizes steady state consumption per worker.
Macroeconomics

In the circular flow diagrama

profit flows from the product market to the firms.

b. revenue

Question

In the circular flow diagram

a. profit flows from the product market to the firms.

b. revenue

flows from the resource market to the households.

c. consumer spending flows from the product market to the households.

d. consumer spending flows from the product market to the firms.

e. consumer spending flows from households to the product market.

Macroeconomics