Macroeconomics 3rd Global Edition Daron Acemoglu ,David Laibson ,John List - Solutions

Unlock the secrets of "Macroeconomics 3rd Global Edition" with comprehensive solutions and answers available online. Access the answers key and solution manual for detailed chapter solutions and solved problems. Whether you're tackling test bank questions or seeking step-by-step answers, our instructor manual provides the guidance you need. Discover textbook solutions in a convenient PDF format for free download and enhance your understanding with questions and answers tailored to your learning needs. Get the insights and clarity needed for mastering macroeconomic concepts with our expertly crafted resources.

Using the information in this chapter, label each of the following statements true, false or uncertain. Explain briefly.a. The share of labour income in GDP is much larger than the share of capital income.b. GDP in the EU15 was 14 times higher in 2008 than it was in 1970.c. When the unemployment
From problem 6, write down the quarters during which the economy has experienced negative output growth since 1970.Go to the Eurostat web page. Retrieve the monthly data series on the unemployment rate for the period 1970 to the most recent year available. Make sure all data series are seasonally
Post-war recessions in Europe This question looks at the recessions of the past 40 years.To handle this problem, first obtain quarterly data on output growth in your country for the period 1970 to the latest year available from the Eurostat website (go to the Economy and Finance Section under
When will Chinese output catch up with US output?In 2008, US output was $14.3 trillion and Chinese output was$4.4 trillion. Suppose that from now on, the output of China grows at an annual rate of 10% per year (roughly what it has done during the past decade), while the output of the USA grows at
Productivity growth in the USA The average annual growth rate of output per worker in the USA rose from 1.8% during the period 1970–1995 to 2.8% for the years 1996–2006. This has led to talk of a New Economy and of sustained higher growth in the future than in the past.a. Suppose output per
Productivity growth in China Productivity growth is at the heart of recent economic developments in China.a. How has China achieved high rates of productivity growth in recent decades?b. Has Europe achieved high rates of productivity growth in the past decade?c. To what degree do you think
Macroeconomic policy in Europe Beware of simplistic answers to complicated macroeconomic questions. Consider each of the following statements and comment on whether there is another side to the story.a. There is a simple solution to the problem of high European unemployment: reduce labour market
Using the information in this chapter, label each of the following statements true, false or uncertain. Explain briefly.a. The unemployment rate in the USA increased considerably at the end of the last decade, but it is still substantially lower than the unemployment rate in Europe.b. In the 1960s
12. Recall the discussion in “Letting the Data Speak” regarding the Chinese yuan. Why did the Chinese authorities keep the yuan undervalued until the end of 2016? At the beginning of 2014, $1 was valued roughly at 6.05 yuan, while by the end of 2016, $1 was valued at 6.95 yuan, since then it
11. Imagine that there are two economies in the world:Bostonia and New Yorkland. Bostonia’s currency is the sock and New Yorkland’s is the yank. Despite the longstanding rivalry between their citizens, Bostonia and New Yorkland are trading partners.a. The Central Bank of New Yorkland decides to
10. You may have seen the term “capital flight” in news articles about developing countries. Capital flight occurs when foreign investors, often spooked by political instability, lose confidence in a country’s assets and decide to sell them. This phenomenon is particularly concerning to the
9. Thailand and Taiwan are both rapidly growing Asian economies that trade actively with other countries.a. Suppose a computer circuit board is the only good produced in Thailand and Taiwan. The circuit board costs 100 baht in Thailand and 200 NT (New Taiwan dollars)in Taiwan. The nominal exchange
8. Since 2008, the dollar has generally appreciated against the euro.a. Suppose that in the short run, the Fed wanted both to weaken the dollar (that is, stop its appreciation and/or cause it to depreciate) and stimulate investment.Based on what you have learned in this chapter and in Chapter 13,
7. The following graph shows the Hungarian forint (HUF)per U.S. dollar (USD) exchange rate for 2008–2017.The table that follows shows the real interest rates in the United States and Hungary during the same period.What could explain why the Hungarian forint depreciated between 2008 and 2017 with
6. Challenge Problem: The beautiful, mythical country of Coloradial uses the teo as its currency, and the gritty, post-industrial country of Oheo uses the eren. Exactly 1 year ago, you could get 100 teos in exchange for 5 erens in the foreign exchange market. Since then, though, the real interest
5. Econia trades with its neighbors, the countries of Governmentia and Sociologia. In Econia, the currency is called the econ; in Governmentia, the currency is called the gov; and in Sociologia, the currency is the soc.Nominal exchange rates are:200 econs = 1 gov, 4 socs = 1 gov, 100 econs = 1
4. Using the net exports curve and the labor demand and labor supply curve, explain how a rise in the real exchange rate can lead to decrease in employment in a country.
3. In 2011, the government of Argentina developed a new policy (sometimes called the “dollar clamp”) to prevent Argentines from exchanging pesos, the local currency, for U.S. dollars. New restrictions hampered currency exchange: for example, buying dollars required advance approval from the
2. Recall from Chapter 6 that the Big Mac index is used as a rough measure of purchasing power parity across countries. In January 2021, The Economist magazine reported: “A Big Mac costs 66,000 dong in Vietnam and US$5.66 in the United States. The implied exchange rate is 11,660.78. The
1. Suppose that the European Union follows a flexible exchange rate regime. The exchange rate between the euro (EUR) and the U.S. dollar (USD) is currently 1 EUR = 1.17 USD.a. Use a graph to show the equilibrium in the foreign exchange market with the U.S.-dollar-per-euro exchange rate on the
4. The Evidence-Based Economics feature discusses how George Soros’s hedge fund made money by betting on the devaluation of the British pound. Interestingly, Soros also made money betting against the Thai baht. In 1997, the baht had been continually falling against the U.S.dollar. The Bank of
3. Based on what you know about the sustainability of undervalued vs. overvalued exchange rates, would you guess that most managed exchange rates are undervalued or overvalued?
2. Suppose a monetary authority is holding its country’s exchange rate above the equilibrium value by using$10 billion of foreign currency reserves (e.g., U.S.dollars) each month to buy domestic currency.a. How long can this situation last assuming that the country has $100 billion of foreign
1. Suppose a monetary authority is holding its country’s exchange rate below the equilibrium value by issuing domestic currency (e.g., the Indonesia rupiah), which the monetary authority uses to buy $10 billion of U.S.dollars per month.a. How long can this situation last, assuming that the
12. The economy of Freedonia is currently faced with high unemployment. Explain how the Freedonian central bank could increase net exports and lower unemployment.
11. All else being equal, explain how an increase in the real interest rate is likely to affect a country’s net exports, labor demand, and level of employment.
10. How does a change in a country’s real exchange rate affect its net exports?
9. How is the real exchange rate for the United States calculated?
8. Why might a country peg its exchange rate at a level that overvalues its own currency?
7. What does it mean to say that, at an exchange rate of$1 = 70 INR, the U.S. dollar is overvalued and the Indian rupee (INR) is undervalued?
6. What does the supply curve for dollars show? Why does the supply curve for dollars slope upward?
5. What does the demand curve for dollars show? Why does the demand curve for dollars slope downward?
4. What are the advantages of undervaluation and overvaluation of a currency to an economy? What are the disadvantages of each?
3. Distinguish among flexible, fixed, and managed exchange rates.
2. When is a currency said to appreciate or depreciate?
1. How is the nominal exchange rate between two currencies defined?
12. The coffee market is one of the most globalized and volatile commodity markets in existence. In terms of the value of trade, it is second only to oil. Coffee is produced in over seventy countries, primarily lower-income nations in Latin America, Africa, and Asia. In recent years, a movement has
11. Foreign direct investment in several sectors in India is still heavily regulated. After much debate, the government of India recently relaxed restrictions on foreign direct investment in the retail sector. Purportedly for reasons like national security and possible job losses, many sectors of
10. Throughout the 1950s and 1960s, many countries with low income per capita pursued a policy called “importsubstituting industrialization,” or ISI for short. India, and many nations in Africa and Latin America, closed themselves off to trade in order to promote the development of domestic
9. In 2019, the U.S. current account deficit was $480 billion, while the trade deficit was $577 billion.a. Why are the trade deficit and the current account deficit different?b. Based on the information in this problem, what were U.S. net capital outflows in the second quarter of 2020? Carefully
8. Suppose the following table shows data on transactions between Hungary and the rest of the world for the second quarter of 2017. Assuming the list is exhaustive, use the information given to fill in the table showing the current and financial accounts for the second quarter of 2017. Transaction
7. Former President Donald Trump argued that China was exploiting the United States. In particular, he decried the large trade deficit with China—he often said that China was “killing” the United States on trade. Is having a trade deficit with another country inherently bad?Explain why a
6. The United States has maintained a free trade policy since World War II. However, since the election of President Trump, there is growing discourse that tariffs should be imposed to save American industries and jobs.According to CNBC, in 2015, China was the United States’ largest import
5. Use the information below to answer the questions that follow.a. Which country has the absolute advantage in producing cars? In producing wheat?b. For the United States, what is the opportunity cost of producing a car? What is the opportunity cost of producing a ton of wheat?c. For Germany, what
4. Assume that an American worker can produce 5 cars per year or 10 tons of grain per year, whereas a Japanese worker can produce 15 cars per year or 5 tons of grain per year. Assume for this exercise that labor is the only input used in car and grain production.a. Which country has the absolute
3. In India, an acre of land can produce 40 tons of sugarcane or 65 bushels of corn per season, while in the United States, an acre of land can produce 20 tons of sugarcane or 150 bushels of corn per season.a. Which country has the absolute advantage in the production of sugarcane? Of corn?
2. You and your roommate are enrolled in the same course: Postmodern Deconstruction of Postmodern Deconstructionism. The course requires a term paper.Since the professor encourages collaboration on the paper, you decide to work on it together, “trading” tasks.In 8 hours, you can type 18 pages,
1. Nobel laureate Paul Samuelson (1969) once said of the concept of comparative advantage: “That it is logically true need not be argued before a mathematician; that it is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for
4. Many of the children working in factories are girls.Because their wages are higher than in agriculture, they tend to delay marriage and their first birth. How might globalization improve the position of women as a result?
3. Using Exhibit 14.11, estimate the impact of economic growth on child labor. Specifically, estimate how child labor will be affected by growing GDP from $1,000 per capita to$10,000 per capita.
2. If factories tend to be located in towns and cities, what is the impact of economic development on the degree of urbanization?
1. List the economic benefits and economic costs of moving from the agricultural sector to the manufacturing sector in a developing economy.
14. Are multinational companies harming factory workers in the developing world by hiring them at low wages?
13. What is foreign direct investment? Explain with an example.How does foreign direct investment benefit the recipient country?
12. What are net capital outflows? Use an example to explain how they are related to net exports.
11. What is included in a country’s financial account? How is the financial account related to the current account?
10. What does the current account include? Describe each of its components. Are all of these components included in GDP? Explain.
9. List the sources of income-based payments that domestic residents make to foreigners and the ways that domestic residents can receive income-based payments from foreigners.
8. The international accounting system maintains a clear distinction between residency and citizenship.a. Who would be considered a domestic resident of the United States, according to the international accounting system?b. Suppose a U.S. citizen lives and works in Nigeria.Would they be considered
7. Why is it a problem if a country is running a current account deficit? How can this be balanced out?
6. Has trade been increasing or decreasing over the past few decades as a fraction of GDP? What could explain why the ratio of imports to GDP in the United States fell sharply in the 1930s? Hint: Read the Wikipedia entry about the Smoot–Hawley Tariff Act.
5. How is trade between Mexico and the United States theoretically different from trade between California and Texas? Are there practical differences?
4. Explain the following terms:a. Open economyb. Closed economyc. Importsd. Exportse. Tariffs
3. Engaging in trade increases overall economic efficiency.Does this also imply that everyone in an economy gains from trade equally?
2. How does trade allow buyers and sellers to exploit gains from specialization?
1. How does comparative advantage differ from absolute advantage?
11. The European Central Bank (ECB) manages monetary policy for the eurozone. In 2019, the ECB’s policy rate(the ECB’s version of the federal funds rate) was already at 0 percent, before the start of the 2020 recession.a. Using the concept of the zero lower bound, explain how low interest rates
10. Milton Friedman, the renowned monetary economist, gave the following analogy about the Fed.“Imagine your house is being heated by a heater. The heater is controlled by a thermostat. The way it’s set up, when the house gets a little too warm, the thermostat turns off the heater; if it gets
9. According to the article Politics and investment:Examining the territorial allocation of public investment in Greece, in the 34 years before the 2008 financial crisis, public expenditure in various constituencies in Greece was closely correlated with electoral results. The regions that voted a
8. Two economists estimate the government taxation multiplier and come up with different results. One estimates the multiplier at 0.75, while the other comes up with an estimate of 1.25.a. What do these different estimates imply about the consequences of government taxation (or transfers)?b. If the
7. According to the Taylor rule, how should an inflation rate above 2 percent affect the federal funds rate?
6. According to the Taylor rule, how should a negative output gap affect the federal funds interest rate?
5. Why is observing the Taylor rule important in ensuring macroeconomic stability? What are the potential effects of not taking it into consideration? Visit http://www.global-rates.com and check the following pages.a. The ECB refi rate, European central bank’s interest rateb. Inflation Europe
4. You and a friend are debating the merits of using monetary policy during a severe recession. Your friend says that the central bank needs to lower interest rates all the way down to zero. According to your friend, zero nominal interest rates will boost lending and investment; consumers and firms
3. Indicate whether the following phenomena will lead to a shift in the reserves supply and demand curve for the Bank of England (BoE), where the horizontal axis indicates the quantity of reserves and the vertical axis the interest rate of the Bank of England. In your answer, use a graph of the
2. The following figures show the European Central Bank’s (ECB) balance sheet as well as the balance sheet of a commercial bank in France, Crédit Paribas Bank. Suppose the ECB wants to raise bank reserves by€2 billion.Assuming that Crédit Paribas Bank is the only bank that is going to
1. Former chairman of the Federal Reserve Alan Greenspan used the term “irrational exuberance” in 1996 to describe the high levels of optimism among stock market investors at the time. Stock market indexes, such as the S&P Composite Price Index, were at an all-time high, and the stock market
6. Explain why the multiplier for payments to people who were unemployed is greater than the multiplier for payments that were made universally to all adults.
5. Adding up these four pieces and assuming that GDP would have been $19.1 trillion in 2020 without the CARES Act, by what percentage did the CARES Act raise 2020 GDP?
4. Assume that the multiplier on the rest of the CARES Act(mostly transfers to businesses and the establishment of collateral for loans from the Federal Reserve System)was 0.25. If $1,350 billion was budgeted for these programs in the CARES Act, what was the associated increase in GDP?
3. Assume that the multiplier on $1,200 payments that were made universally to all adults (regardless of their employment status) was 0.5. If $300 billion was budgeted for these payments in the CARES Act, what was the associated increase in GDP?
2. Assume that the multiplier on payments to hospitals as well as state and local governments was 0.75. If $300 billion was budgeted for these programs in the CARES Act, what was the associated increase in GDP?
1. Assume that the multiplier on payments to people who are unemployed was 0.75. If $250 billion was budgeted for these programs in the CARES Act, what was the associated increase in GDP?
20. What aspect of the CARES Act represented a mix of fiscal and monetary policy?
19. Why is the Troubled Asset Relief Program (TARP) considered an example of a countercyclical policy that represents a mix of fiscal and monetary policy?
18. What could explain why a decrease in taxes could lead to a less than one-for-one increase in output?
17. The CARES Act (2020) financed government spending and transfers to firms and households that occurred primarily in 2020, whereas the American Recovery and Reinvestment Act (2009) financed fiscal spending that was spread out over many years. Why did the rapid spending associated with the CARES
16. Why might the fiscal multipliers be lower during a pandemic?
15. Why do governments, in most cases, not follow countercyclical fiscal policy? How can the need for discretionary fiscal policies be decreased?
14. What are the automatic and discretionary components of fiscal policy?
13. According to the Taylor rule, when should the Federal Reserve lower or raise the federal funds rate?
12. What does the Taylor rule state?
10. How does the zero lower bound on interest rates affect the working of monetary policy?
9. Briefly explain how an increase in the quantity of reserves that commercial banks hold at the Federal Reserve could lead to inflation.
8. Does the effectiveness of monetary policy depend on inflation expectations? Explain.
7. Other than interest on reserves (IOR), open market operations, and quantitative easing, what tools does the Federal Reserve use to manipulate interest rates in the economy?
6. A successful campaign of quantitative easing increases bond prices and decreases interest rates. Lower interest rates increase the value of real estate and stocks as well as bonds. Given that the wealthy own real estate, stocks, and bonds, how might quantitative easing worsen income inequality?
5. What is quantitative easing? Why do central banks undertake quantitative easing programs?
4. Briefly explain how expansionary monetary policy shifts the labor demand curve to the right.
3. How does an increase in interest on reserves (IOR) effect the federal funds rate?

Showing 1300 - 1400 of 5010

First
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
Last

Macroeconomics 3rd Global Edition Daron Acemoglu ,David Laibson ,John List - Solutions

Step by Step Answers