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
S
Books
FREE
Study Help
Expert Questions
Accounting
General Management
Mathematics
Finance
Organizational Behaviour
Law
Physics
Operating System
Management Leadership
Sociology
Programming
Marketing
Database
Computer Network
Economics
Textbooks Solutions
Accounting
Managerial Accounting
Management Leadership
Cost Accounting
Statistics
Business Law
Corporate Finance
Finance
Economics
Auditing
Tutors
Online Tutors
Find a Tutor
Hire a Tutor
Become a Tutor
AI Tutor
AI Study Planner
NEW
Sell Books
Search
Search
Sign In
Register
study help
business
foundations macroeconomics
Macroeconomics Policy And Practice 1st Edition Frederic S. Mishkin - Solutions
What is the real interest rate? Why can the Fed control the real interest in the short run but not in the long run?REVIEW QUESTIONS All questions are available in at www.myeconlab.com.The Monetary Policy Curve
On February 17, 2010, the Wall Street Journal reported on spending from the stimulus package signed into law a year earlier. Part of that stimulus package ($93 billion) was paid out in the form of tax credits. However, even though interest rates did not change significantly during that year,
In fall 2009, the Obama administration decided to impose tariffs on car tires manufactured in China. As a result, imports of car tires decreased.Considering only the decrease in imports,a) comment on the effect of such a measure on the IS curve.b) show your answer graphically.
Suppose that Dell Corporation has 20,000 computers in its warehouses on December 31, 2009, ready to be shipped to merchants (each computer is valued at $500). By December 31, 2010, Dell Corporation has 25,000 computers ready to be shipped, each valued at $450.a) Calculate Dell’s inventory on
Calculate the consumption expenditure using the consumption function (as described by Equation 2) and the following estimates:Autonomous consumption: $1,450 billion Income: $14,000 billion Taxes: $3,000 billion Marginal propensity to consume: 0.8
Assume the following estimates:Autonomous consumption: $1,625 billion Disposable income: $11,500 billion Using the consumption function in Equation 2, calculate consumption expenditure if an increase of $1,000 in disposable income leads to an increase of $750 in consumption expenditure.
The Bureau of Economic Analysis valued nominal U.S. gross domestic product (i.e., actual expenditure) at $14,460 billion at the end of 2009. Suppose that the consumption expenditure was $10,250 billion, planned investment spending was $1,680 billion, and government spending was $2,970 billion.a)
What does the IS curve show? Why does it slope downward?Factors That Shift the IS Curve
What happens to aggregate output if unplanned inventory investment is either positive or negative?Understanding the IS Curve
How and why do changes in the real interest rate affect net exports?Goods Market Equilibrium
According to the consumption function what variables determine aggregate spending on consumer goods and services? How is consumption related to each of these variables?
What are the four components of planned expenditure and why did Keynesian analysis emphasize this concept?
Do you think that the hourly wage (i.e., the price of labor) is a relatively flexible or a relatively sticky price? Explain why
Suppose that in a given economy all goods and services produced are sold in perfectly competitive markets. Would you represent this economy using the classical or Keynesian approach? Explain why.
For each of the following products, state if they are sold in a perfectly competitive market or in a monopolistically competitive market:a) Dairy products (e.g., milk, cheese, etc.)b) Cars
Discuss the following statement: “When Keynes stated that ‘in the long run, we are all dead’ he meant that we should only focus in the short run and not pay attention to any long-run consequence of our actions, since we will be dead by then and we therefore should not care.”Price Stickiness
Using Table 8.1 (NBER business cycles), identify the longest and shortest expansion and contraction in the United States from December 1854 to November 2001. What are your thoughts about the periodicity and persistence of U.S. business cycles?Time Horizons in Macroeconomics
For the variables, real GDP, consumer spending, investment, unemployment, inflation, stock prices, interest rates, and credit spreads, categorize which are procycical, countercyclical, and acyclical, and which are leading, lagging, and coincident.A Brief History of U.S. Business Cycles
Refer to the data provided in Problem 4 to answer the following questions:a) Plot real GDP and the stock price index on the same graph.b) Plot the unemployment and inflation rates on the same graph.c) Considering real GDP and the unemployment rate, when would you say that the economy reached its
Consider the information given in the following table to answer the following questions.Assume the business cycle is entirely determined by changes in real GDP:a) Identify the peak and trough during this period.b) Comment on the timing of the inflation rate and the stock prices index.
The NBER Business Cycle Dating Committee stated that the U.S. economy entered a recession in December 2007. The S&P/Case-Shiller Home Price Index (a widely used measure of home prices) shows an increase from January 2000 to April 2006. Since then, home prices decreased until May 2009. According to
Discuss the following statement: “Real GDP has decreased for two quarters in a row; we definitively are living through a contraction.”
How do conflicting views of market structure influence the ideas of classical and Keynesian macroeconomists regarding price and wage flexibility and how quickly the economy adjusts to long-run equilibrium?
How do Keynesian views on macroeconomic fluctuations differ from those of classical macroeconomists?Price Stickiness
What is the difference between the short run and the long run in macroeconomic analysis?Why do macroeconomists differentiate between the two time horizons?
What were the “Great Inflation” and the“Great Moderation”?Time Horizons in Macroeconomics
Classify the following economic variables as procyclical or countercyclical and as leading, lagging, or coincident variables: real consumer spending, real investment spending, unemployment, inflation, S&P 500 Index, spread between long- and short-term interest rates on U.S. government bonds, and
Distinguish between leading, lagging, and coincident economic variables.
Distinguish between procyclical and countercyclical economic variables.
What are business cycles? What are the four parts of a business cycle?
Discuss the validity of the following statement: “Unlike Solow’s model, Romer’s model concludes that changes in the saving rate do not affect the sustained per-capita output growth rate.”
During the late 1960s Chinese authorities imposed the precepts of the “Cultural Revolution” on their people. As a result almost all scholars and researchers were sent to the fields to perform manual agricultural tasks.Comment on the effect this had on the perperson output growth rate, according
Consider the world economy and comment on the effect of the Industrial Revolution on the world growth rate of output per person according to the assumptions of the Romer model.
Suppose total population is 100 million and 25% is devoted to the production of research and development. Using the simplified version of the Romer model outlined in the chapter, calculate the following:a) Change in technology , if and At = 20b) The growth rate of technologyc) The per-person output
Do you tend to agree more with Sachs (foreign aid should be increased) or with Easterly (more foreign aid can do more harm than good) in the foreign aid debate? Explain your arguments
Do you think corruption affects the enforcement of property rights, or is it that badly designed institutions create opportunities for corruption? In other words, does corruption determine the enforcement and design of property rights, or is it the other way around, with causality running from the
Transparency International constructs the Corruption Perception Index (CPI), meant to measure “the perceived level of public-sector corruption in 180 countries and territories around the world.” The CPI ranges from 0 (most corrupt) to 10 (least corrupt). Plot the CPI values for these selected
The International Property Right Index (IPRI)ranks countries according to the significance and protection of both intellectual and physical property rights. What correlation between income per capita growth and the IPRI ranking might you expect? Why?
How might the effects of government spending on proper sewage infrastructure that results in improved sanitation for crowded cities in poor countries promote economic growth?
Uruguay implemented the One Laptop per Child (OLPC) initiative at the beginning of 2007. This program aimed to give one laptop to every child and teacher in a public primary school. By the second semester of 2009, every child and teacher in a public primary school had a laptop. Comment on the
The White House website describing the Economic Recovery Act of 2009 states “The Recovery Act [. . .] provides for $7.2 billion for broadband internet access nationwide, including grants for rural broadband access, expanding computer center capacity, and sustainable broadband adoption
Compare the following factors of production in terms of their rivalry and excludability:a) A robot that welds car frames and the idea of building a car in an assembly lineb) A recipe to make pancakes and the recipe to manufacture a soda drink
What is the impact of an increase in saving in the Romer model?Technology as a Production Input
In the Romer model, how does an increase in total population affect the growth rate of percapita output over time?
In the Romer model, how does an increase in the fraction of the population engaged in R&D affect the growth rate of per-capita output over time?
Why is sustained per-capita growth possible in the Romer model but not in the Solow model?
What is a patent? Why do governments grant them?Institutions and Property Rights
As an input to production, how does technology differ from labor and capital inputs?REVIEW QUESTIONS All questions are available in at www.myeconlab.com.Policies to Promote Productivity
Use the graphic representation of the Solow growth model to explain why an increase in the technology factor A leads to a more than proportional increase in both the capital-labor ratio and output per worker.
Refer to Problem 1 for data and assume now that the population growth rate increases to 5%. Calculate the new steady state values of the capital-labor ratio and output. Explain your answer graphically and compare the new values of the capital-labor ratio and output per worker to those obtained in
Refer to the previous problem and assume now that the saving rate increases to 50%.Calculate the new steady state values of the capital-labor ratio and output. Explain your answer graphically.
Use the following table to find the steady-state values of the capital-labor ratio and output(i.e., complete the table) if the per-worker production function is :
One of the goals of the Obama administration is to develop and encourage the use of new technologies, in particular, in the energy industry. What would be the effect of an increase in technology on the Golden Rule capital-labor ratio?
The following table contains information about the marginal product of capital corresponding to each capital-labor ratio(measured as the value of the capital stock per capita). Use it to determine the Golden Rule capital ratio if the depreciation rate is 5% and the population growth rate is 2%.
What would be the effect on the Golden Rule capital-labor ratio of a decrease in the depreciation rate?
What would be the effect on the Golden Rule capital-labor ratio of an increase in the population growth rate?
What would be the consequences for future generations of a saving rate that is lower than the Golden Rule level of the savings rate?
What distinguishes the Golden Rule capitallabor ratio from other possible capital-labor ratios? What determines whether the economy will operate at the Golden Rule capitallabor ratio?
Start by drawing a given country’s steady state, using only the investment and the depreciation and capital dilution curves. On the same graph do the following:a) Consider the effects of an immigration wave of individuals that exhibit both higher saving and fertility rates than the current
Start by graphing the U.S. steady state capitallabor ratio and label it (draw only the investment and the depreciation and capital dilution curves).a) On the same graph show the effects of the following:● The massive immigration wave of the early 1900s k1900*● The increase in productivity
One of the most well-known population control policies is the one-child policy implemented by China since the late 1970s.Comment on the side effects of such a policy.This policy has been dubbed a success, since fertility rates dropped by a considerable amount. Do you agree with this type of
Assume that low standards of living (i.e., low capital-labor ratios, in the Solow model's terms) are the reason that some countries exhibit high fertility rates. Comment on the effect of population control policies to reduce fertility rates. Explain why you think such policies will be effective or
Consider the effects of an increase in the saving rate on the United States capital-labor ratio, according to the Solow model.a) What would be the immediate effect of a saving rate increase on the capital-labor ratio? What would be the long run effect?b) Do you think it is worth it to increase the
The following graph describes Chile’s economy before the devastating earthquake of yt = 2kt 0.5 February 27, 2010. Assume Chile was its steadystate capital-labor ratio before the earthquake.a) On the same graph, identify the new capital-labor ratio immediately after this event.b) Describe how the
Assume that the per-worker production function is . The saving and depreciation rate rates are estimated at 0.2 and 0.04, respectively.a) Calculate the capital-labor ratio steady state for this economy.b) Calculate consumption per worker at the steady state.
Suppose two countries have the same growth rates of their capital and labor inputs. These factors contribute two percentage points to their respective countries’ total output growth rates. Output growth rates are 2.5% for country 1 and 4.5% for country 2.a) Explain the difference in total output
Suppose that the economy of India can be represented by the following production function:. During 2009 India’s technological growth (Solow residual) was 4%. The growth rates of the capital and labor input stocks were 3% in both cases.a) Calculate India’s output growth for 2009.b) What is the
How does an increase in total factor productivity affect output per worker?Summing Up the Solow Model
In the Solow growth model, which variables are exogenous and which are endogenous?Productivity Growth in the Solow Model
Beginning from a steady state in the Solow growth model, explain how an increase in the saving rate will affect the levels and growth rates of capital and output per worker.Population Growth in the Solow Model
What are the two determinants of the steadystate level of capital per worker? Why does capital per worker move to this steady-state level?Saving Rate Changes in the Solow Model
What determines the amount of investment per worker and capital accumulation in the Solow growth model?
In the per worker production function, what determines the level of output per worker?Which one of these factors does the Solow growth model consider to be exogenous?
During the recent 2007–2009 financial crisis in the United States the excess reserves ratio increased to unprecedented values of around 90–100%. At the same time, checkable deposits and currency remained mostly unchanged, whereas the monetary base increased substantially (the Fed did not change
Calculate the money multiplier for the following values of the currency, excess reserves, and required reserves ratios (i.e., complete the following table) and explain why the money multiplier decreases when the currency or excess reserves ratio increase:Currency deposit ratio 0.5 0.7 0.5 Excess
Under very particular conditions banks would like to borrow from the Fed and not use these funds to make loans, but rather they would keep them in the form of excess reserves. What would be the effect on the monetary base and the money supply of an increase in discount loans that are kept in the
Suppose the Federal Reserve conducts an open market purchase for $100 million.Assuming the required reserves ratio is 10%, what would be the effect on the money supply in each of the following situations?a) There is only one bank and the bank decides not to make a loan with its excess reserves.b)
The Federal Reserve announced the reduction of many lending facilities originally created to extend loans to financial intermediaries during the most difficult years of the recent subprime crisis, like the term auction facility(TAF). What would be the effect of the closing of the TAF on the
Some developing countries have suffered banking crises in which depositors lost part or all of their deposits (in some countries there is no deposit insurance). This type of crisis decreases depositors’ confidence in the banking system. What would be the effect of a rumor about a banking crisis
Use the Fed and the banking system T-accounts to describe the effects of a Fed sale of $200 million worth of government bonds to a bank that pays with part of its reserves held at the Fed.What would be the effect of this transaction on the Fed’s monetary liabilities?
Use the following information to determine the Fed’s balance sheet and calculate the Fed’s monetary liabilities:Currency in circulation = $750 billion Reserves of the banking system = $850 billion Government securities held by the Fed =$450 billion Discount loans = $1,150 billion
Identify the five factors that determine the money supply. For each factor, explain which player(s) in the money supply process—the Federal Reserve, depositors, and banks—control or influence it and how and why it affects the money supply.
Suppose the Fed buys U.S. Treasury securities from Bank of America. According to the simple model of multiple deposit creation, how does this open market purchase affect the money supply? What are the two basic assumptions of the simple model you have described?
Suppose Alex earned $500 (nominal capital gain) from selling stock he bought ten years ago. During the last ten years prices increased significantly, which means that Alex’s real capital gain is only $300. If the tax applied to capital gains is 35%,a) calculate Alex’s real after tax capital
Plot the following table on a graph measuring average money growth rates on the horizontal axis and average inflation rates on the vertical axis (data is for the period 1991–2000, from the Inter-American Development Bank). Inflation is measured using the CPI and the monetary aggregate considered
Inhabitants of Pandora use stone beads as money. On average, every stone bead is used five times per year to carry out transactions.The total supply of beads is forty million.a) What is the level of aggregate spending in Pandora according to the quantity theory of money?b) Suppose now that the
Assume that you are interested in earning some return on idle balances you usually keep in your checking account and decide to buy some money market mutual fund shares by writing a check. Comment on the effect of your action(everything else the same) on M1 and M2.
Consider the following table with data about monetary aggregates (billions of dollars, seasonally adjusted data):a) Calculate the annualized growth rate of M1 and M2 for the following periods:Feb. 2009–Feb. 2010 (one year), Aug. 2009–Feb. 2010 (six months), and Nov 2009–Feb. 2010 (three
In the movie The Count of Monte Cristo (2002) a scene shows the main character paying for an estate in France using a wagon full of silver and gold coins. During the 1800s it was not common for people to pay for a house using this method, but gold and silver pieces were quite extensively used as a
What are the costs of anticipated and unanticipated inflation?
What is the Fisher effect? What is its significance?The Cost of Inflation
What is hyperinflation? What has been the main cause of hyperinflation episodes?Inflation and Interest Rates
How is the quantity theory of money converted into a theory of inflation? According to this theory, what determines the inflation rate?Hyperinflation
What are the classical dichotomy, the quantity theory of money, and the neutrality of money?
What is the relationship between velocity and the equation of exchange?
What key assumption of classical economists provides the basis for their analysis of the relationship between money and other economic variables?
What are the M1 and M2 monetary aggregates?Quantity Theory of Money
What are open market operations? What open market operation can the Federal Reserve conduct to increase the money supply?Measuring Money
Describe the three primary functions money performs in an economy.
Investment in the United States declined sharply as a result of the subprime financial crisis. Assuming the United States is a large open economy, explain how a decrease in investment will affect the equilibrium world interest rate and the U.S. trade surplus.
Showing 3700 - 3800
of 5010
First
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
Last
Step by Step Answers
Get 50% OFF
Claim Now
