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

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

1 …

If NX falls $40 billion, the MPC is 8/11, and there is a multiplier effect (no crowding out and no

Question

1. If NX falls $40 billion, the MPC is 8/11, and there is a multiplier effect (no crowding out and no

investment accelerator), how much does aggregate change (direction and size)?

Macroeconomics

1 …

If NX falls $40 billion, the MPC is 8/11, and there is a multiplier effect (no crowding out and no

Question

1. If NX falls $40 billion, the MPC is 8/11, and there is a multiplier effect (no crowding out and no

investment accelerator), how much does aggregate change (direction and size)?

Macroeconomics

Changes in the quantity of money lead to real changes in the economy If this is the case why would the central

Question

Changes in the quantity of money lead to real changes in the economy. If this is the case, why would the central

bank ever stop increasing the money supply?

Possible Answers:

Although there is a short-run incentive to increase the money supply, these effects wear off in the long run as prices adjust and then drive up the value of money.

The government has rules in place on the maximum amount the money supply can be increased in a given fiscal year.

Although there is a short-run incentive to increase the money supply, these effects wear off in the long run as prices adjust and then drive down the value of money.

Increasing the money supply is not a politically popular action and may lead to leaders of the central bank not getting reelected.

The short-run benefits are outweighed by the short-run costs of increases in the money supply.

Macroeconomics

Changes in the quantity of money lead to real changes in the economy If this is the case why would the central

Question

Changes in the quantity of money lead to real changes in the economy. If this is the case, why would the central

bank ever stop increasing the money supply?

Possible Answers:

Although there is a short-run incentive to increase the money supply, these effects wear off in the long run as prices adjust and then drive up the value of money.

The government has rules in place on the maximum amount the money supply can be increased in a given fiscal year.

Although there is a short-run incentive to increase the money supply, these effects wear off in the long run as prices adjust and then drive down the value of money.

Increasing the money supply is not a politically popular action and may lead to leaders of the central bank not getting reelected.

The short-run benefits are outweighed by the short-run costs of increases in the money supply.

Macroeconomics

Consider the following economic data to answer #1013

Unemployment rate= 4%

Inflation rate=

Question

Consider the following economic data to answer #10-13.

Unemployment rate= 4%

Inflation rate=

2%

Actual GDP= $17 trillion

Growth rate= 2%

Potential GDP= $20 trillion

Marginal Propensity to consume=.7

Based on the data, answer the following:

(5) 10. What data indicate there is a problem and why?

(2) 11. How much and what kind of gap is this economy experiencing?

(3) 12. State a fiscal policy option to fix the problem. State a monetary policy option to fix the problem.

(5) 13. How much must spending change to close the gap? Show your calculations. (Hint: don’t forget the multiplier effect)

Macroeconomics

The table attached shows total amount to build the swimming pool average costs total labor costs

Question

The table attached shows total amount to build the swimming pool, average costs, total labor costs

and

average labor costs that vary depending on the number of employees you hire for your pool company.

1. How do I calculate the total value of the 3 people, how was the value calculated?

2. What is the total labor cost with 4 people in the pool, and explain the method for the calculation.

3. Analyze the relationship between average benefits and average costs by filling in the blanks in the following statement:

4. If a another team wants to build the pool, as long as their average benefit exceeds their average cost, then this results in ________ people being hired and a net benefit (total donations minus total labor costs) of ________?

5. What is the marginal benefit (in terms of extra donations) of the 2nd person?

6. How does the marginal cost of the 4th person will increase the total labor cost.

7. What’s the net benefit of hiring people for the pool is the largest?

Number of
Average Donations
Total Labor Costs
Average Labor
Employees
Total Donations
Costs
$30,000
$8,000
2
$42,426
$17,000
$17,321
$27,000
4
$60,000
$9,500
$13,416
$50,000
Macroeconomics

The table attached shows total amount to build the swimming pool average costs total labor costs

Question

The table attached shows total amount to build the swimming pool, average costs, total labor costs

and

average labor costs that vary depending on the number of employees you hire for your pool company.

1. How do I calculate the total value of the 3 people, how was the value calculated?

2. What is the total labor cost with 4 people in the pool, and explain the method for the calculation.

3. Analyze the relationship between average benefits and average costs by filling in the blanks in the following statement:

4. If a another team wants to build the pool, as long as their average benefit exceeds their average cost, then this results in ________ people being hired and a net benefit (total donations minus total labor costs) of ________?

5. What is the marginal benefit (in terms of extra donations) of the 2nd person?

6. How does the marginal cost of the 4th person will increase the total labor cost.

7. What’s the net benefit of hiring people for the pool is the largest?

Number of
Average Donations
Total Labor Costs
Average Labor
Employees
Total Donations
Costs
$30,000
$8,000
2
$42,426
$17,000
$17,321
$27,000
4
$60,000
$9,500
$13,416
$50,000
Macroeconomics

Consider the following economic data to answer #1013

Unemployment rate= 4%

Inflation rate=

Question

Consider the following economic data to answer #10-13.

Unemployment rate= 4%

Inflation rate=

2%

Actual GDP= $17 trillion

Growth rate= 2%

Potential GDP= $20 trillion

Marginal Propensity to consume=.7

Based on the data, answer the following:

(5) 10. What data indicate there is a problem and why?

(2) 11. How much and what kind of gap is this economy experiencing?

(3) 12. State a fiscal policy option to fix the problem. State a monetary policy option to fix the problem.

(5) 13. How much must spending change to close the gap? Show your calculations. (Hint: don’t forget the multiplier effect)

Macroeconomics

If there is a decrease in personal taxes the correct sequence of events is

a. a decrease in taxes

Question

If there is a decrease in personal taxes, the correct sequence of events is

a. a decrease in taxes

increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and price level.

b. a decrease in taxes increases disposable income which shifts AD to the right increasing output and decreasing price level.

c. a decrease in taxes shifts AD to the right increasing output and price level.

d. a decrease in taxes increases consumer spending which shifts AD to the right increasing output and price level.

e. a decrease in taxes increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and decreasing price level.

Macroeconomics

If there is a decrease in personal taxes the correct sequence of events is

a. a decrease in taxes

Question

If there is a decrease in personal taxes, the correct sequence of events is

a. a decrease in taxes

increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and price level.

b. a decrease in taxes increases disposable income which shifts AD to the right increasing output and decreasing price level.

c. a decrease in taxes shifts AD to the right increasing output and price level.

d. a decrease in taxes increases consumer spending which shifts AD to the right increasing output and price level.

e. a decrease in taxes increases disposable income which increases consumer spending. The increase in consumer spending shifts AD to the right increasing output and decreasing price level.

Macroeconomics

You recently bought

a $10,000 10
year US
government bond that guarantees you 2% interest per year

Question

You recently bought a $10,000 10 year US government bond that guarantees you 2% interest per year

for each of the next 10 years, after which you will receive your initial $10,000 back. If interest rates in the US increase as a result of a strong economy, what impact will this have, if any, on the market value of your bond?

Macroeconomics

You recently bought

a $10,000 10
year US
government bond that guarantees you 2% interest per year

Question

You recently bought a $10,000 10 year US government bond that guarantees you 2% interest per year

for each of the next 10 years, after which you will receive your initial $10,000 back. If interest rates in the US increase as a result of a strong economy, what impact will this have, if any, on the market value of your bond?

Macroeconomics

2 • In the Keynesian cross model assume that the consumptionfunction is given

Question

2. • In the Keynesian cross model, assume that the consumption

function is given

by

C=120+0.8(Y−T).

Planned investment is 200; government purchases and taxes are both 400.

a. Graph planned expenditure as a function of income.

b. What is equilibrium income?

c. If government purchases increase to 420, what is the new equilibrium income?

What is the multiplier for government purchases?

d. What level of government purchases is needed to achieve an income of 2,400?

(Taxes remain at 400.)

e. What level of taxes is needed to achieve an income of 2,400? (Government

purchases remain at 400.)

Macroeconomics

2 • In the Keynesian cross model assume that the consumptionfunction is given

Question

2. • In the Keynesian cross model, assume that the consumption

function is given

by

C=120+0.8(Y−T).

Planned investment is 200; government purchases and taxes are both 400.

a. Graph planned expenditure as a function of income.

b. What is equilibrium income?

c. If government purchases increase to 420, what is the new equilibrium income?

What is the multiplier for government purchases?

d. What level of government purchases is needed to achieve an income of 2,400?

(Taxes remain at 400.)

e. What level of taxes is needed to achieve an income of 2,400? (Government

purchases remain at 400.)

Macroeconomics

You are given the following information

The labor force consists of
154,704

Question

You are given the following information:

The labor force consists of 154,704

adults

The number of employed adults within the labor force is 139,442

The number of adults not in the labor force is 82,624

What is the unemployment rate in this economy?

Macroeconomics

a)Assume that a society has two types of workers that lose jobs in a given year Society A has 2

Question

a)Assume that a society has two types of workers that lose jobs in a given year. Society A has 2

million workers losing their jobs; each person takes a year to find a new job. Society B has 24 million workers losing their jobs; each worker takes a month to find a new job. How many spells’ of unemployment occur each year in the economy? What percentage of the spells is only one month long?

b)If you take all the unemployed workers each year and multiply each by the length of the unemployment spell, how many worker months’ of unemployment would there be in the economy each year? Of all the worker months of unemployment, how many are accounted for by the workers unemployed one year at a time?

c)If the number of employed workers equals 325 million and the number of unemployed workers equals 75 million, what is the unemployment rate?

I do not understand what part of this question is in violation of the honor code. If you DO NOT want to answer it you don’t have too, but STOP flagging this question without telling me whats wrong with it. Thanks

Macroeconomics

a)Assume that a society has two types of workers that lose jobs in a given year Society A has 2

Question

a)Assume that a society has two types of workers that lose jobs in a given year. Society A has 2

million workers losing their jobs; each person takes a year to find a new job. Society B has 24 million workers losing their jobs; each worker takes a month to find a new job. How many spells’ of unemployment occur each year in the economy? What percentage of the spells is only one month long?

b)If you take all the unemployed workers each year and multiply each by the length of the unemployment spell, how many worker months’ of unemployment would there be in the economy each year? Of all the worker months of unemployment, how many are accounted for by the workers unemployed one year at a time?

c)If the number of employed workers equals 325 million and the number of unemployed workers equals 75 million, what is the unemployment rate?

I do not understand what part of this question is in violation of the honor code. If you DO NOT want to answer it you don’t have too, but STOP flagging this question without telling me whats wrong with it. Thanks

Macroeconomics

You are given the following information

The labor force consists of
154,704

Question

You are given the following information:

The labor force consists of 154,704

adults

The number of employed adults within the labor force is 139,442

The number of adults not in the labor force is 82,624

What is the unemployment rate in this economy?

Macroeconomics

Which country has the absolute

Question

. Which country has the absolute

advantage?

b. Which country has the comparative advantage?

c. Which country has a lower opportunity cost?

d. Which country has a higher opportunity cost?

e. What should the United States import?

f. What should Australia export?

g. What is the opportunity cost for the United States?

h. What is the opportunity cost for Australia?

SHOW ALL WORK!

Macroeconomics

Which country has the absolute

Question

. Which country has the absolute

advantage?

b. Which country has the comparative advantage?

c. Which country has a lower opportunity cost?

d. Which country has a higher opportunity cost?

e. What should the United States import?

f. What should Australia export?

g. What is the opportunity cost for the United States?

h. What is the opportunity cost for Australia?

SHOW ALL WORK!

Macroeconomics

Consider the economy of Hicksonia a The consumption function is given byC=300+0 6(Y−T) The

Question

Consider the economy of Hicksonia.

a. The consumption function is given by

C=300+0.6(Y−T).

The

investment function is

I=700−80r.

Government purchases and taxes are both 500. For this economy, graph the IS

curve for r ranging from 0 to 8.

b. The money demand function in Hicksonia is

(M/P)d=Y−200r.

The money supply M is 3,000, and the price level P is 3. Graph the LM curve for

r ranging from 0 to 8.

c. Find the equilibrium interest rate r and equilibrium income Y.

d. Suppose that government purchases are increased from 500 to 700. How does

the IS curve shift? What are the new equilibrium interest rate and income?

e. Suppose instead that the money supply is increased from 3,000 to 4,500. How

does the LM curve shift? What are the new equilibrium interest rate and

income?

f. With the initial values for monetary and fiscal policy, suppose the price level

rises from 3 to 5. What happens? What are the new equilibrium interest rate

and income?

g. For the initial value of monetary and fiscal policy, derive and graph an

equation for the aggregate demand curve. What happens to this aggregate

demand curve if fiscal or monetary policy changes, as in parts (d) and (e)?

Macroeconomics

Consider the economy of Hicksonia a The consumption function is given byC=300+0 6(Y−T) The

Question

Consider the economy of Hicksonia.

a. The consumption function is given by

C=300+0.6(Y−T).

The

investment function is

I=700−80r.

Government purchases and taxes are both 500. For this economy, graph the IS

curve for r ranging from 0 to 8.

b. The money demand function in Hicksonia is

(M/P)d=Y−200r.

The money supply M is 3,000, and the price level P is 3. Graph the LM curve for

r ranging from 0 to 8.

c. Find the equilibrium interest rate r and equilibrium income Y.

d. Suppose that government purchases are increased from 500 to 700. How does

the IS curve shift? What are the new equilibrium interest rate and income?

e. Suppose instead that the money supply is increased from 3,000 to 4,500. How

does the LM curve shift? What are the new equilibrium interest rate and

income?

f. With the initial values for monetary and fiscal policy, suppose the price level

rises from 3 to 5. What happens? What are the new equilibrium interest rate

and income?

g. For the initial value of monetary and fiscal policy, derive and graph an

equation for the aggregate demand curve. What happens to this aggregate

demand curve if fiscal or monetary policy changes, as in parts (d) and (e)?

Macroeconomics

2 • An economy has a CobbDouglas production function Y=Kα(LE)1−α (For

Question

2. • An economy has a Cobb-Douglas production function:

Y=Kα(LE)1−α.

(For

a review of the Cobb-Douglas production function, see Chapter 3.) The

economy has a capital share of 1/3, a saving rate of 24 percent, a depreciation rate

of 3 percent, a rate of population growth of 2 percent, and a rate of laboraugmenting

technological change of 1 percent. It is in steady state.

a. At what rates do total output, output per worker, and output per effective

worker grow?

b. Solve for capital per effective worker, output per effective worker, and the

marginal product of capital.

c. Does the economy have more or less capital than at the Golden Rule steady

state? How do you know? To achieve the Golden Rule steady state, does the

saving rate need to increase or decrease?

d. Suppose the change in the saving rate you described in part (c) occurs. During

the transition to the Golden Rule steady state, will the growth rate of output

per worker be higher or lower than the rate you derived in part (a)? After the

economy reaches its new steady state, will the growth rate of output per

worker be higher or lower than the rate you derived in part (a)? Explain your

answers.

Macroeconomics

2 • An economy has a CobbDouglas production function Y=Kα(LE)1−α (For

Question

2. • An economy has a Cobb-Douglas production function:

Y=Kα(LE)1−α.

(For

a review of the Cobb-Douglas production function, see Chapter 3.) The

economy has a capital share of 1/3, a saving rate of 24 percent, a depreciation rate

of 3 percent, a rate of population growth of 2 percent, and a rate of laboraugmenting

technological change of 1 percent. It is in steady state.

a. At what rates do total output, output per worker, and output per effective

worker grow?

b. Solve for capital per effective worker, output per effective worker, and the

marginal product of capital.

c. Does the economy have more or less capital than at the Golden Rule steady

state? How do you know? To achieve the Golden Rule steady state, does the

saving rate need to increase or decrease?

d. Suppose the change in the saving rate you described in part (c) occurs. During

the transition to the Golden Rule steady state, will the growth rate of output

per worker be higher or lower than the rate you derived in part (a)? After the

economy reaches its new steady state, will the growth rate of output per

worker be higher or lower than the rate you derived in part (a)? Explain your

answers.

Macroeconomics

All sources used including the textbook must be referenced

paraphrased and quoted material must have
1. ( Consumption) Use the following data to answer the question below: Real disposable income
(Billion $)
100
200
300
400 Consumption Expenditure
(Billion $)
150
200
250
300 Savings (Billion $)…
Macroeconomics

All sources used including the textbook must be referenced

paraphrased and quoted material must have
1. ( Consumption) Use the following data to answer the question below: Real disposable income
(Billion $)
100
200
300
400 Consumption Expenditure
(Billion $)
150
200
250
300 Savings (Billion $)…
Macroeconomics

Assume the economy is at full employment as of January 2018 and the government passes a tax bill that reduces

Question

Assume the economy is at full employment as of January 2018 and the government passes a tax bill that reduces

taxes by $100B. The tax bill, however, does not change government spending. (These are are all short answer, but please provide enough detail to explain your answer. That is, it is not sufficient to claim prices go down or output goes up. Explain, briefly, why that happened.)

A. What effect is this likely to have on output and prices levels?

B. What effect will this have on interest rates and investment?

C. What is the likely response by the Federal Reserve?

D. Suppose that the economy was below full employment, how would that change your answer?

Macroeconomics

Assume the economy is at full employment as of January 2018 and the government passes a tax bill that reduces

Question

Assume the economy is at full employment as of January 2018 and the government passes a tax bill that reduces

taxes by $100B. The tax bill, however, does not change government spending. (These are are all short answer, but please provide enough detail to explain your answer. That is, it is not sufficient to claim prices go down or output goes up. Explain, briefly, why that happened.)

A. What effect is this likely to have on output and prices levels?

B. What effect will this have on interest rates and investment?

C. What is the likely response by the Federal Reserve?

D. Suppose that the economy was below full employment, how would that change your answer?

Macroeconomics

1) Generally if a county(the domestic county) has a trade deficit if will correct itself

Question

1) Generally if a county(the domestic county) has a trade deficit, if will correct itself

by:

A) the domestic currency getting weaker

B) the domestic currency getting stronger

C) using tariffs to slow the imports

D) increased gov. Spending

2)inflation and unemployment are tradeoffs under which economic view.

A) Neoclassical B) Isolationist C )Keynesian D) all of the above

3) increasing the requires reserves will:

A) increase money supply

B)decrease money supply

C) Not affect the money supply

D) you need the reserves on hand to answer

4)which of the following is a correct fiscal policy initiative during a recession?

A)tax increase

B) required reserve increase

C)government spending increase

D) discount rate increase

Macroeconomics

1) Generally if a county(the domestic county) has a trade deficit if will correct itself

Question

1) Generally if a county(the domestic county) has a trade deficit, if will correct itself

by:

A) the domestic currency getting weaker

B) the domestic currency getting stronger

C) using tariffs to slow the imports

D) increased gov. Spending

2)inflation and unemployment are tradeoffs under which economic view.

A) Neoclassical B) Isolationist C )Keynesian D) all of the above

3) increasing the requires reserves will:

A) increase money supply

B)decrease money supply

C) Not affect the money supply

D) you need the reserves on hand to answer

4)which of the following is a correct fiscal policy initiative during a recession?

A)tax increase

B) required reserve increase

C)government spending increase

D) discount rate increase

Macroeconomics

As output increases after a recession which one of the following statements best describes what happens to

Question

As output increases after a recession, which one of the following statements best describes what happens to

prices?

Select one:

a. As output increases, prices at first remain stable. As some resources begin to be fully employed, prices increase. But when the economy reaches full employment, only prices increase.

b. As output increases, prices at first remain stable. As some resources begin to be fully employed, prices increase. But when the economy reaches full employment, prices become stable again.

c. As output increases, prices at first remain stable; but at some point, they begin to rise proportionately.

d. As output increases, prices increase proportionately

Macroeconomics

In an economy in which the multiplier has a value of 3 the price level has decreased from 115 to 110 As a

Question

In an economy in which the multiplier has a value of 3, the price level has decreased from 115 to 110. As a

consequence, there has been a movement along the aggregate demand curve from $18 trillion in real GDP to $18.9 trillion in real GDP.

A. What is the marginal prosperity to save?

B. What was the amount of the change in planned expenditures generated by the decline in the price level?

Macroeconomics

In an economy in which the multiplier has a value of 3 the price level has decreased from 115 to 110 As a

Question

In an economy in which the multiplier has a value of 3, the price level has decreased from 115 to 110. As a

consequence, there has been a movement along the aggregate demand curve from $18 trillion in real GDP to $18.9 trillion in real GDP.

A. What is the marginal prosperity to save?

B. What was the amount of the change in planned expenditures generated by the decline in the price level?

Macroeconomics

Consider the following hypothetical data for the US economy in 2020 (all amounts are in trillions of dollars)

Question

Consider the following hypothetical data for the US economy in 2020 (all amounts are in trillions of dollars).

Consumption- 11.0

Non-income-related taxes net of subsidies- 0.8

Depreciation- 1.3

Government spending- 3.8

Imports- 2.7

Gross private domestic investment- 4.0

Exports- 2.5

A. Based on the data, what is GDP? NDP? NI?

B. Suppose that in 2021, esports fall to $2.3 trillion, imports rise to $2.85 trillion, and gross private domestic investment falls to $3.25 trillion. What will gdp be in 2021, assuming that other values do not change between 2020 and 2021?

Macroeconomics

Consider the following hypothetical data for the US economy in 2020 (all amounts are in trillions of dollars)

Question

Consider the following hypothetical data for the US economy in 2020 (all amounts are in trillions of dollars).

Consumption- 11.0

Non-income-related taxes net of subsidies- 0.8

Depreciation- 1.3

Government spending- 3.8

Imports- 2.7

Gross private domestic investment- 4.0

Exports- 2.5

A. Based on the data, what is GDP? NDP? NI?

B. Suppose that in 2021, esports fall to $2.3 trillion, imports rise to $2.85 trillion, and gross private domestic investment falls to $3.25 trillion. What will gdp be in 2021, assuming that other values do not change between 2020 and 2021?

Macroeconomics

As output increases after a recession which one of the following statements best describes what happens to

Question

As output increases after a recession, which one of the following statements best describes what happens to

prices?

Select one:

a. As output increases, prices at first remain stable. As some resources begin to be fully employed, prices increase. But when the economy reaches full employment, only prices increase.

b. As output increases, prices at first remain stable. As some resources begin to be fully employed, prices increase. But when the economy reaches full employment, prices become stable again.

c. As output increases, prices at first remain stable; but at some point, they begin to rise proportionately.

d. As output increases, prices increase proportionately

Macroeconomics

45 According to the circular flow diagram which of the following is true?

I. The

Question

45.

According to the circular flow diagram, which of the following is true?

I. The

government is a buyer in the product market.

II. The government is a seller in the product market.

III. The government is a borrower in financial markets.

I only.

II and III only.

III only.

II only.

I and III only.

Macroeconomics