New Semester Started Get 50% OFF Study Help! --h --m --s Claim Now

Question Answers

Textbooks

Find textbooks, questions and answers

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Study Help
Tutors
AI Study Planner NEW
Sell Books

Search
Sign In
Register

study help
business
foundations macroeconomics

Macroeconomics 6th Edition Olivier Jean Blanchard - Solutions

8. The churn The Bureau of Labor Statistics presents a forecast of occupations with the largest job decline and the largest job growth.Examine the tables at www.bls.gov/emp/emptab4.htm (for the largest job decline) and www.bls.gov/emp/emptab3.htm(for the largest job growth).a. Which occupations in
7. Technology and the labor market In the appendix to Chapter 6, we learned how the wagesetting and price-setting equations could be expressed in terms of labor demand and labor supply. In this problem, we extend the analysis to account for technological change.Consider the wage-setting equation
6. Productivity and the aggregate supply curve Consider an economy in which production is given by Y = AN Assume that price setting and wage setting are described in the equations below.Price setting: P = 11 + m21W>A2 Wage setting: W = Ae Pe 11 - u2 Recall that the relation between employment, N,
5. Technological progress, agriculture, and employment Discuss the following statement: “Those who argue that technological progress does not reduce employment should look at agriculture. At the start of the last century, there were more than 11 million farm workers. Today, there are fewer than 1
4. How might policy changes in (a) through (d) affect the wage gap between low-skill and high-skill workers in the United States?a. increased spending on computers in public schools.b. restrictions on the number of foreign temporary agricultural workers allowed to enter the United States.c. an
3. Discuss the following statement: “Higher labor productivity allows firms to produce more goods with the same number of workers and thus to sell the goods at the same or even lower prices.That’s why increases in labor productivity can permanently reduce the rate of unemployment without
2. Suppose an economy is characterized by the equations below.Price setting: P = 11 + m21W>A2 Wage setting: W = Ae Pe11 - u2a. Solve for the unemployment rate if Pe = P but Ae does not necessarily equal A. Explain the effects of 1Ae>A2 on the unemployment rate.Now suppose that expectations of both
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. The change in employment and output per person in the United States since 1900 lends support to the argument that technological progress leads to a steady increase in
Now suppose that banking services in year 2 are not the same as banking services in year 1. Year 2 banking services include telebanking, which year 1 banking services did not include.The technology for telebanking was available in year 1, but the price of banking services with telebanking in year 1
8. Growth accounting The appendix to this chapter shows how data on output, capital, and labor can be used to construct estimates of the rate of growth of technological progress. We modify that approach in this problem to examine the growth of capital per worker.Y = K1>3 1AN22>3 The function gives
7. Discuss the potential role of each of the factors listed in (a)through (g) on the steady state level of output per worker. In each case, indicate whether the effect is through A, through K, through H, or through some combination of A, K, and H. A is the level of technology, K is the level of
6. Suppose that the economy’s production function is Y = 2K 2AN that the saving rate, s, is equal to 16%, and that the rate of depreciation,d, is equal to 10%. Suppose further that the number of workers grows at 2% per year and that the rate of technological progress is 4% per year.a. Find the
5. Measurement error, inflation, and productivity growth Suppose that there are only two goods produced in an economy: haircuts and banking services. Prices, quantities, and the number of workers occupied in the production of each good for year 1 and for year 2 are given below:h. Consider this
4. For each of the economic changes listed in (a) and (b), assess the likely impact on the growth rate and the level of output over the next five years and over the next five decades.a. A permanent reduction in the rate of technological progress.b. A permanent reduction in the saving rate.
3. Sources of technological progress: Leaders versus followers.a. Where does technological progress come from for the economic leaders of the world?b. Do developing countries have other alternatives to the sources of technological progress you mentioned in part (a)?c. Do you see any reasons
2. R&D and growtha. Why is the amount of R&D spending important for growth?How do the appropriability and fertility of research affect the amount of R&D spending?How do each of the policy proposals listed in (b) through (e)affect the appropriability and fertility of research, R&D spending in the
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. Writing the production function in terms of capital and effective labor implies that as the level of technology increases by 10%, the number of workers required to achieve
9, suppose that the federal budget deficit was eliminated and there was no change in private saving. What would be the effect on the long-run capital stock per worker? What would be the effect on long-run output per worker?
10. U.S. saving This question continues the logic of Problem 9 to explore the implications of the U.S. budget deficit for the long-run capital stock. The question assumes that the United States will have a budget deficit over the life of this edition of the text.a. Go to the most recent Economic
9. Deficits and the capital stock For the production function, Y = 1K 1N equation (11.8)gives the solution for the steady-state capital stock per worker.a. Retrace the steps in the text that derive equation (11.8).b. Suppose that the saving rate, s, is initially 15% per year, and the depreciation
8. Continuing with the logic from Problem 7, suppose that the economy’s production function is given by Y = K1>3 N2>3 and that both the saving rate, s, and the depreciation rate,d, are equal to 0.10.a. What is the steady-state level of capital per worker?b. What is the steady-state level of
7. The Cobb-Douglas production function and the steady state.This problem is based on the material in the chapter appendix.Suppose that the economy’s production function is given by Y = Ka N1-a and assume that a = 1>3.a. Is this production function characterized by constant returns to scale?
6. Suppose that the production function is given by Y = 0.51K 1Na. Derive the steady-state levels of output per worker and capital per worker in terms of the saving rate, s, and the depreciation rate, d.Chapter 11 Saving, Capital Accumulation, and Output 245 246 The Long Run The Coreb. Derive the
5. Suppose the United States moved from the current pay-asyou-go Social Security system to a fully funded one, and financed the transition without additional government borrowing. How would the shift to a fully funded system affect the level and the rate of growth of output per worker in the long
4. Discuss how the level of output per person in the long run would likely be affected by each of the following changes:a. The right to exclude saving from income when paying income taxes.b. A higher rate of female participation in the labor market(but constant population).
3. In Chapter 3 we saw that an increase in the saving rate can lead to a recession in the short run (i.e., the paradox of saving).We examined the issue in the medium run in Problem 5 at at the end of Chapter 7. We can now examine the long-run effects of an increase in saving.Using the model
2. Consider the following statement: “The Solow model shows that the saving rate does not affect the growth rate in the long run, so we should stop worrying about the low U.S. saving rate. Increasing the saving rate wouldn’t have any important effects on the economy.” Explain why you agree or
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. The saving rate is always equal to the investment rate.b. A higher investment rate can sustain higher growth of output forever.c. If capital never depreciated, growth could
8. Growth successes and failures Go to the Web site containing the Penn World Table and collect data on real GDP per capita (chained series) for 1970 for all available countries. Do the same for a recent year of data, say one year before the most recent year available in the Penn World Table. (If
7. Convergence in two sets of countries Go to the Web site containing the Penn World Table and collect data on real GDP per person (chained series) from 1951 to the most recent year available for the United States, France, Belgium, Italy, Argentina, Venezuela, Chad, and Madagascar.a. Define for
6. Convergence between Japan and the United States since 1950 Go to the Web site containing the Penn World Table(pwt.econ.upenn.edu) and collect data on the annual growth rate of GDP per person for the United States and Japan from 1951 to the most recent year available. In addition, collect the
5. Between 1950 and 1973, France, Germany, and Japan all experienced growth rates that were at least two percentage points higher than those in the United States. Yet the most important technological advances of that period were made in the United States. How can this be?EXPLORE FURTHER
4. The growth rates of capital and output Consider the production function given in problem 3.Assume that N is constant and equal to 1. Note that if z = xa, then gz a gx, where gz and gx are the growth rates of z and x.a. Given the growth approximation here, derive the relation between the growth
3. Consider the production function Y = 2K 2Na. Compute output when K = 49 and N = 81.b. If both capital and labor double, what happens to output?c. Is this production function characterized by constant returns to scale? Explain.d. Write this production function as a relation between output per
2. Assume that the average consumer in Mexico and the average consumer in the United States buy the quantities and pay the prices indicated in the following table:Food Transportation Services Price Quantity Price Quantity Mexico 5 pesos 400 20 pesos 200 United States$1 1,000 $2 2,000a. Compute U.S.
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. On a logarithmic scale, a variable that increases at 5% per year will move along an upward-sloping line with a slope of 0.05.b. The price of food is higher in poor
7. The TED spread The text described the fluctuations in the Ted spread that occurred during the financial crisis. Do an internet search and find the recent history of the Ted spread. You can find this information easily from various sources.a. Consult Figure 9-3 to compare the current value of the
6. The Troubled Asset Relief Program (TARP)Consider a bank that has assets of 100, capital of 20, and short-term credit of 80. Among the bank’s assets are securitized assets whose value depends on the price of houses. These assets have a value of 50.a. Set up the bank’s balance sheet.Suppose
5. Modern bank runs Consider a simple bank that has assets of 100, capital of 20, and checking deposits of 80. Recall from Chapter 4 that checking deposits are liabilities of a bank.a. Set up the bank’s balance sheet.b. Now suppose that the perceived value of the bank’s assets falls by 10. What
4. Nontraditional macroeconomic policy: financial policy and quantitative easing Consider again the economy described in Figure 9-9, and suppose that the IS and LM relations are IS: Y = C1Y - T, confidence2 + I1Y, confidence, i + premium2 + G LM: M>P = Y L1i2 Interpret the interest rate as the
3. Traditional monetary and fiscal policy—the AS–AD view Consider an economy described by Figure 9-10, with output lower than the natural level of output and the nominal interest rate at zero.a. Draw Figure 9-10 and explain why the AD curve has a vertical portion.b. If the Federal Reserve
2. Traditional monetary and fiscal policy—the IS–LM view Consider an economy described by Figure 9-9, with output lower than the natural level of output and the nominal interest rate at zero.a. Draw Figure 9-9 using the LM curve passing through Point A.b. If the Federal Reserve increases the
1. Using information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. The loss in output that resulted from the financial crisis is many times larger than the losses on mortgages held by U.S. financial institutions.b. An increase in a bank’s
10. Money growth and the growth in real output over timea. Fill in the empty spaces after Year 1 in the chart. This economy is in medium-run equilibrium in every year
9. Changes in the natural rate of unemploymenta. Repeat Problem 8 but now draw separate graphs for the period 1970 to 1990 and the period since 1990.b. Do you find that the relation between inflation and unemployment is different in the two periods? If so, how has the natural rate of unemployment
8. Estimating the natural rate of unemployment To answer this question, you will need data on the annual U.S. unemployment and inflation rates since 1970, which can be obtained very easily from the Economic Report of the President Web site http://www.gpoaccess.gov/eop/index.html Excel tables of the
7. Supply shocks and wage flexibility Suppose that the Phillips curve is given by pt - pt-1 = - a1ut - un2 where un = 1m + z2>a.Recall that this Phillips curve was derived in this chapter under the assumption that the wage-bargaining equation took the form W = Pe11 - aut + z2 We can think of a as a
6. The macroeconomic effects of the indexation of wages Suppose that the Phillips curve is given by pt - pet= 0.1 - 2ut where pet= pt-1 Suppose that inflation in year t - 1 is zero. In year t, the authorities decide to keep the unemployment rate at 4% forever.a. Compute the rate of inflation for
Suppose that the economy can be described by the following three equations:ut - ut-1 = -0.41gyt - 3%2 Okun’s law pt - pt-1 = -1ut - 5%2 Phillips curve gyt = gmt - pt Aggregate demanda. Reduce the three equations to two by substituting gyt from the aggregate demand equation into Okun’s law.
5. The effects of a permanent decrease in the rate of nominal money growth
4. The neutrality of money revisiteda. Fill in the empty spaces after Year 1 in the chart below:Year MNominal Money Supply(billions)gM Growth Rate of Nominal Money Supply(percent)P Price Level (index)Year 2 100 Inflation(percent)1 380.95 95.2 2 400 3 420 105.0 4 441 110.25b. What is the growth
3. Mutations of the Phillips curve Suppose that the Phillips curve is given by pt = pet+ 0.1 - 2uta. What is the natural rate of unemployment?Assume pet= upt-1 and suppose that u is initially equal to 0. Suppose that the rate of unemployment is initially equal to the natural rate.In year t, the
2. Discuss the following statements.a. The Phillips curve implies that when unemployment is high, inflation is low, and vice versa. Therefore, we may experience either high inflation or high unemployment, but we will never experience both together.b. As long as we do not mind having high inflation,
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. The original Phillips curve is the negative relation between unemployment and inflation that was first observed in the United Kingdom.b. The original Phillips curve
12. Growth and fluctuations: some economic history When economists think about history, fluctuations often stand out—oil shocks and stagflation in the 1970s, a recession followed by a long expansion in the 1980s, a recession followed by an extraordinary low-unemployment, low-inflation boom in the
Suppose there is an increase in the real price of energy. In addition, despite the increase in the real price of energy, suppose that the expected price level (i.e., Pe) does not change. After the short-run effect of the increase in the real price of energy, will there be any further adjustment of
Suppose that the economy begins with output equal to the natural level of output. Then the real price of energy increases. Show the short-run and medium-run effects of the increase in the real price of energy in an AS–AD diagram.The text suggests that a change in expectations about monetary
11. Adding energy prices to the AS curve In this problem, we incorporate the price of energy inputs(e.g., oil) explicitly into the AS curve.Suppose the price-setting equation is given by P = (1 + m)Wa P1-a Ewhere PE is the price of energy resources and 0 6 a 6 1.Ignoring a multiplicative constant,
Suppose there is a reduction in income taxes. How will this affect the unemployment rate in the short run and the medium run? How about the real wage? For a given worker, how will after-tax income be affected?
Suppose there is an increase in oil prices. How will this affect the unemployment rate in the short run and the medium run? How will it affect the real wage (W/P)?
10. Taxes, oil prices, and workers Everyone in the labor force is concerned with two things:whether they have a job and, if so, their after-tax income from that job (i.e., their after-tax real wage). An unemployed worker may also be concerned with the availability and amount of unemployment
9. Based on your answers to Problems 7 and 8 and the material from the chapter, comment on the following statement:“The Federal Reserve has the easiest job in the world. All it has to do is conduct expansionary monetary policy when the unemployment rate increases and contractionary monetary
4. The neutrality of moneya. In what sense is money neutral? How is monetary policy useful if money is neutral?b. Fiscal policy, like monetary policy, cannot change the natural level of output. Why then is monetary policy considered neutral but fiscal policy is not?c. Discuss the statement
3. Aggregate supply shocks and the medium run Consider an economy with output equal to the natural level of output. Now suppose there is an increase in unemployment benefits.a. Using the model developed in this chapter, show the effects of an increase in unemployment benefits on the position of the
2. Aggregate demand shocks and the medium run Suppose the economy begins with output equal to its natural level. Then, there is a reduction in income taxes.a. Using the AS–AD model developed in this chapter, show the effects of a reduction in income taxes on the position of the AD, AS, IS, and LM
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. The aggregate supply relation implies that an increase in output leads to an increase in the price level.b. The natural level of output can be determined by looking solely
The rate of unemployment remains substantially higher after the crisis-induced recession in 2009. In that recession, unemployment benefits were extended in length from 6 months to 12 months. What does the model predict the effect of this policy will be on the natural rate of unemployment?Do the
Explain the pattern of the unemployment rate after a recession if discouraged workers return to the labor force as the economy recovers.
10. The typical dynamics of unemployment over a recession.The table below shows the behavior of annual real GDP growth during three recessions. These data are from Table B-4 of the Economic Report of the President:Year Real GDP Growth Unemployment Rate 1981 2.5 1982 1.9 1983 4.5 1990 1.9 1991 0.2
9. Go to the Web site maintained by the U.S. Bureau of Labor Statistics (www.bls.gov). Find the latest Employment Situation Summary. Look under the link “National Employment.”a. What are the latest monthly data on the size of the U.S. civilian labor force, on the number of unemployed, and on
8. Unemployment spells and long-term unemployment According to the data presented in this chapter, about 47%of unemployed workers leave unemployment each month.a. What is the probability that an unemployed worker will still be unemployed after one month? two months? six months?Now consider the
In the first economy, EatIn, the 25 food-preparation workers(one per household) cook for their families and do not work outside the home. All meals are prepared and eaten at home.The 25 food-preparation workers in this economy do not seek work in the formal labor market (and when asked, they say
7. The informal labor market You learned in Chapter 2 that informal work at home(e.g., preparing meals, taking care of children) is not counted as part of GDP. Such work also does not constitute employment in labor-market statistics. With these observations in mind, consider two economies, each
6. The existence of unemploymenta. Suppose the unemployment rate is very low. How easy is it for firms to find workers to hire? How easy is it for workers to find jobs? What do your answers imply about the relative bargaining power of workers and firms when the unemployment rate is very low? What
5. Bargaining power and wage determination Even in the absence of collective bargaining, workers do have some bargaining power that allows them to receive wages higher than their reservation wage. Each worker’s bargaining power depends both on the nature of the job and on the economy-wide labor
3. The natural rate of unemployment Suppose that the markup of goods prices over marginal cost is 5%, and that the wage-setting equation is W = P11 - u2, where u is the unemployment rate.a. What is the real wage, as determined by the price-setting equation?b. What is the natural rate of
2. Answer the following questions using the information provided in this chapter.a. As a percentage of the employed workers, what is the size of the flows into and out of employment (i.e., hires and separations) each month?b. As a percentage of the unemployed workers, what is the size of the flows
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. Since 1950, the participation rate in the United States has remained roughly constant at 60%.b. Each month, the flows into and out of employment are very small compared to
10. Consumption, investment, and the recession of 2001 This question asks you to examine the movements of investment and consumption before, during, and after the recession of 2001. It also asks you to consider the response of investment and consumption to the events of September 11, 2001.Go to the
9. The Clinton–Greenspan policy mix As described in this chapter, during the Clinton administration the policy mix changed toward more contractionary fiscal policy and more expansionary monetary policy. This question explores the implications of this change in the policy mix, both in theory and
8. The (less paradoxical) paradox of saving A chapter problem at the end of Chapter 3 considered the effect of a drop in consumer confidence on private saving and investment, when investment depended on output but not on the interest rate. Here, we consider the same experiment in the context of the
7. Policy mixes Suggest a policy mix to achieve each of the following objectives.a. Increase Y while keeping i constant.b. Decrease the fiscal deficit while keeping Y constant. What happens to i? To investment?
6. The Bush–Greenspan policy mix In 2001, the Fed pursued a very expansionary monetary policy.At the same time, President George W. Bush pushed through legislation that lowered income taxes.a. Illustrate the effect of such a policy mix on output.b. How does this policy mix differ from the
5. Investment and the interest rate The chapter argues that investment depends negatively on the interest rate because an increase in the cost of borrowing discourages investment. However, firms often finance their investment projects using their own funds.If a firm is considering using its own
4. Consider the following IS–LM model:C = 200 + .25YD I = 150 + .25Y - 1000i G = 250 T = 200 1M>P2d = 2Y - 8000i M>P = 1600 Chapter 5 Goods and Financial Markets: The IS-LM Model 105 106 The Short Run The Corea. Derive the IS relation. (Hint: You want an equation with Y on the left side and
3. The response of investment to fiscal policya. Using the IS–LM diagram, show the effects on output and the interest rate of a decrease in government spending.Can you tell what happens to investment? Why?Now consider the following IS–LM model:C = c0 + c11Y - T2 I = b0 + b1Y - b2i M/P = d1Y -
2. Consider first the goods market model with constant investment that we saw in Chapter 3. Consumption is given by C = c0 + c11Y - T2 and I, G, and T are given.a. Solve for equilibrium output. What is the value of the multiplier?Now let investment depend on both sales and the interest rate:I = b0
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. The main determinants of investment are the level of sales and the interest rate.b. If all the exogenous variables in the IS relation are constant, then a higher level of
10. Current monetary policy Go to the Web site for the Federal Reserve Board of Governors(www.federalreserve.gov) and download the most recent monetary policy press release of the Federal Open Market Committee(FOMC). Make sure you get the most recent FOMC press release and not simply the most
9. Bank runs and the money multiplier preferring to hold on to their cash.During the Great Depression, the U.S. economy experienced many bank runs, to the point where people became unwilling to keep their money in banks, preferring to hold on to their cash cash.How would you expect such a shift
8. The money multiplier The money multiplier is described in Section 4-4. Assume the following:i. The public holds no currency.ii. The ratio of reserves to deposits is 0.1.iii. The demand for money is given by Md = $Y (.8 - 4i )Initially, the monetary base is $100 billion, and nominal income is $5
7. ATMs and credit cards This problem examines the effect of the introduction of ATMs and credit cards on money demand. For simplicity, let’s examine a person’s demand for money over a period of four days.Suppose that before ATMs and credit cards, this person goes to the bank once at the
6. The demand for bonds In this chapter, you learned that an increase in the interest rate makes bonds more attractive, so it leads people to hold more of their wealth in bonds as opposed to money. However, you also learned that an increase in the interest rate reduces the price of bonds.How can an
5. Suppose that a person’s wealth is $50,000 and that her yearly income is $60,000. Also suppose that her money demand function is given by Md = $Y (.35 - i )a. Derive the demand for bonds. Suppose the interest rate increases by 10 percentage points. What is the effect on the demand for bonds?b.
4. Suppose that money demand is given by Md = $Y (.25 - i )where $Y is $100. Also, suppose that the supply of money is $20.a. What is the equilibrium interest rate?b. If the Federal Reserve Bank wants to increase i by 10 percentage points (e.g., from 2% to 12%), at what level should it set the
3. Consider a bond that promises to pay $100 in one year.a. What is the interest rate on the bond if its price today is$75? $85? $95?b. What is the relation between the price of the bond and the interest rate?c. If the interest rate is 8%, what is the price of the bond today?
2. Suppose that a person’s yearly income is $60,000. Also suppose that this person’s money demand function is given by Md = $Y (.35 - i )a. What is this person’s demand for money when the interest rate is 5%? 10%?b. Explain how the interest rate affects money demand.c. Suppose that the
1. Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. Income and financial wealth are both examples of stock variables.b. The term investment, as used by economists, refers to the purchase of bonds and shares of stock.c. The
11. The “exit strategy” problem In fighting the recession associated with the crisis, taxes were cut and government spending was increased. The result was a very large government deficit. To reduce that deficit, taxes must be increased or government spending must be cut. This is the “exit
10. Using fiscal policy in this first (and simplest model) to avoid the recession of 2010:In this chapter, Table 3-1 shows GDP in 2010 was roughly$15,000 billion. You learned in Chapter 1 that GDP fell by approximately 3 percentage points in 2009.a. How many billion dollars is 3 percentage points

Showing 900 - 1000 of 5010

First
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Last

Step by Step Answers

Services

Sitemap
Fun
Definitions
Become Tutor
Used Textbooks
Study Help Categories
Recent Questions
Expert Questions
Campus Wear
Sell Your Books

Company Info

Security
Copyrights
Privacy Policy
Terms & Conditions
SolutionInn Fee
Scholarship
Online Quiz
Give Feedback, Get Rewards

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Student Discount
Campus Ambassador

Secure Payment

Download Our App

© 2026 SolutionInn. All Rights Reserved