All Matches

Solution Library

Expert Answer

Textbooks

Search Textbook questions, tutors and Books

Oops, something went wrong!

Change your search query and then try again

Result Not Found

Books FREE
Tutors
Study Help
Ask a Question

Search
Sign In
Register

study help
business
macroeconomics principles

Questions and Answers of Macroeconomics Principles

In the Focus Box titled "The Vocabulary of Bond Markets," the concept of an inflation-indexed bond was introduced. Although such bonds are typically long in maturity, the example that follows
It was noted in the text that the Federal Reserve purchased, in addition to Treasury bills, large amounts of mortgage-backed securities and long-term government bonds as part of quantitative easing.
Most home-buyers purchase their home with a combination of a cash down payment and a mortgage. The loan-to-value ratio is a rule that establishes the maximum mortgage loan allowed on a home
The United States (unlike other countries) has two types of bank-like financial institutions. Member banks can borrow from the Federal Reserve at the discount rate and must keep currency in their
We discussed the effect of inflation on the effective capital-gains tax rate on the sale of a home. In this question, we explore the effect of inflation on another feature of the tax code- the
Suppose you have been elected to Congress. One day, one of your colleagues makes the following statement:The Fed chair is the most powerful economic policy maker in the United States. We should not
The frequency of the zero lower bound around the world Use the FRED database at the Federal Reserve Bank of St. Louis to find the monthly average nominal policy interest rates for four major central
Consider first the goods market model with constant investment. Consumption is given bya. Solve for equilibrium output. What is the value of the multiplier for a change in autonomous spending?Now let
a. Use an IS-LM diagram to show the effects on output of a decrease in government spending. Can you tell what happens to investment? Why?Now consider the following IS-LM model:b. Solve for
Consider the money market to better understand the horizontal LM curve.a. What is on the left-hand side of equation (5.3)?b. What is on the right-hand side of equation (5.3)?c. Go back to Figure 4-2.
Consider the following numerical example of the IS-LM model:a. Derive the IS relation. (You want an equation with Y on the left side and everything else on the right.)b. The central bank sets an
In 2001, the Fed pursued an expansionary monetary policy and reduced interest rates. At the same time, President George W. Bush pushed through legislation that lowered income taxes.a. Illustrate the
What mix of monetary and fiscal policy is needed to meet the following objectives?a. Increase Y while keeping i constant. Would investment (I) change?b. Decrease a fiscal deficit while keeping Y
Fiscal policy and investment. Read Focus Box “Deficit Reduction: Good or Bad for Investment?”In each case below, there is a fiscal consolidation. Remember that equilibrium condition in good
Label each of the following statements true, false, or uncertain. Explain briefly.a. The nominal interest rate is measured in terms of goods; the real interest rate is measured in terms of money.b.
Compute the real interest rate using the exact formula and the approximation formula for each set of assumptions listed in (a) through (c). a. i 4%; m = 2% i=4%; b. i c. i 15%; n = 11% 54%; m = 46%
Modern bank runs Consider a simple bank that has assets of 100, capital of 20, and checking deposits of 80. Checking deposits are liabilities of a bank.a. Set up the bank’s balance sheet.b. Now
a. There are a few episodes of negative nominal interest rates around the world. Some may or may not be in play as you read this book. The Swiss nominal policy rate(the Swiss equivalent of the
Unconventional monetary policy: financial policy and quantitative easing We have written the IS-LM model in the following terms:Interpret the real policy rate as the federal funds rate adjusted for
The text used Figure 6-3 to describe fluctuations in the spreads between riskless rate on 10-year US Treasury bonds and 10-year AAA and BBB corporate bonds. This figure can be updated by going to the
Some bonds issued by the US Treasury make payments indexed to inflation, compensating investors for inflation. Therefore, the current interest rates on these bonds are real interest rates—interest
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 = P(1 - u), where u is the unemployment rate.a. What is the
In the mid-1980s, a famous supermodel once said that she would not get out of bed for less than $10,000 (presumably per day).a. What is your own reservation wage?b. Did your first job pay more than
The existence of unemploymenta. Why does the wage-setting relation in Figure 1 have an upward slope? As N approaches L, what happens to the unemployment rate?b. The price-setting relation is
The informal labor market in the 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
Go to the website maintained by the US Bureau of Labor Statistics (www.bls.gov). Find the latest Employment Situation Summary. Look under the link “National Employment.”a. What are the latest
A closer look at changes in state labor markets There is a lot of discussion of the decline of the “Rust Belt” and the differences between labor markets at the state level. The table below is a
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
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
The natural rate of unemploymenta. The Phillips curve isRewrite this relation as a relation between the deviation of the unemployment rate from the natural rate, inflation, and expected
The formation of expected inflation The text proposes the following model of expected inflationa. Describe the process of the formation of expected inflation when θ = 0b. Describe the process of the
Label each of the following statements true, false, or uncertain. Explain briefly.a. The IS curve shifts to the right with an increase in \(G\), to the right with an increase in \(T\), and to the
Identifying if an economy is in medium run equilibrium and the necessary central bank action to return the economy to medium run equilibrium Here are values for a hypothetical economy\(Y_{n}=1000 ;
Assume that expected inflation remains equal to the central bank's target rate of inflation. In the discussion of the Phillips curve, it was noted that expected inflation was, for some time, equal to
A shock to aggregate supply will also have different outcomes when there are different assumptions about the formation of the level of expected inflation. As in Question 4, one assumption is that the
Suppose the economy is operating at the zero lower bound for the nominal policy rate; the initial equilibrium is at the positive target rate of inflation and the economy is resting at potential
Answer the following questions based on information found in the table belowa. Is there evidence of the deflation spiral from 1929 to 1933 in the United Kingdom?b. Is there evidence of the effect of
President's Trump's complaints about Federal Reserve policy in 2018 made the news. On December 22, 2017 President Trump signed a bill, the Tax Cuts and Jobs Act that substantially reduced federal
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:a. Compute US consumption per person in
Consider the production functiona. 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
Consider the production function given in Problem 3. Assume that \(N\) is constant and equal to 1 . Note that if \(z=x^{a}\), then \(g_{z} \approx a g_{x}\), where \(g_{z}\) and \(g_{x}\) are the
Convergence between Japan and the United States since 1960 Using the data in the Penn World Tables, find real GDP per capita in the United States and Japan in 1960, 1990, and the most recent year
Convergence in two sets of countries Consider three rich countries: France, Belgium, and Italy, and four poor countries, Ethiopia, Kenya, Nigeria, and Uganda. Define for each country the ratio of its
Your institution may have a subscription to The Economist news magazine, or you may be able to find this graphic on the web. The March 23, 2019 issue, in a section entitled "Graphic Detail: Happiness
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
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 US saving rate. Increasing the
Suppose the United States moved from the current pay-as-you-go Social Security system to a fully funded one and financed the transition without additional government borrowing. How would the shift to
Suppose that the production function is given bya. Derive the steady-state levels of output per worker and capital per worker in terms of the saving rate, \(s\), and the depreciation rate,
Deficits and the capital stock For the production function, \(Y=\sqrt{K} \sqrt{N}\) equation (11.9) gives the solution for the steady-state capital stock per worker.a. Retrace the steps in the text
For each of the economic changes listed in parts \(a\) 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
Suppose that the economy's production function isthat the saving rate, \(s\), is equal to \(16 \%\), and that the rate of depreciation, \(\delta\), is equal to \(10 \%\). Suppose further that the
Label each of the following statements true, false, or uncertain. Explain briefly.a. It is clear that the rate of technological growth has declined in the last decade.b. The change in employment and
How might the policy changes in parts a through e affect the wage gap between low-skill and high-skill workers in the United States?a. Increased spending on computers in public schools.b.
It is possible to extend the production function so that output is produced with labor input, \(N\); capital input, K; and carbon-intensive energy input, \(E\).If we write a production function as
You computed a residual term representing the growth rate of technology using the expressionand the annual growth rates of output, \(g_{Y}\); labor input, \(g_{N}\); and capital input, \(g_{K}\).
a. Which occupations in decline can be linked to technological change? Which can be linked to foreign competition?b. Which occupations that are forecast to grow can be linked to technological change?
a. What evidence is presented in the text that income inequality has increased over time in the United States?b. Use supply and demand of educated workers to explain the increase in income
There is a great deal of interest in carbon emissions because of global warming. The World Bank produces data on carbon emissions by country in a variety of forms. It is found at
Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly.a. The present discounted value of a stream of returns can be calculated in
For which of the problems listed in parts a through \(c\) would you want to use real payments and real interest rates, and for which would you want to use nominal payments and nominal interest rates
Compute the two-year nominal interest rate using the exact formula and the approximation formula for each set of assumptions listed in parts a through \(c\).a. \(i_{t}=2 \% ; i_{t+1}^{e}=3 \%\)b.
a. Explain why, in equation (14.14), it is important that the stock is ex-dividend, that is, it has just paid its dividend and is expected to pay its next dividend in one year.b. Using of equation
The present value of an infinite stream of dollar payments of \(\$ z\) (that starts next year) is \(\$ z / i\) when the nominal interest rate, \(i\), is constant. This formula gives the price of a
Assume the short term real policy rate, current and expected, had been \(2 \%\) until now. Suppose the Fed decides to tighten monetary policy and increase the short-term policy rate \(\left(r_{1
You want to save \$2,000 today for retirement in 40 years.You have to choose between the two plans listed in (i) and (ii).i. Pay no taxes today, put the money in an interest-yielding account, and pay
Houses can be thought of as assets with a fundamental value equal to the expected present discounted value of their future real rents.a. Would you prefer to use real payments and real interest rates
The Economist annually publishes The Economist House Price Index. It attempts to assess which housing markets, by country, are the most overvalued or undervalued relative to fundamentals. Find the
Label each of the following statements true, false, or uncertain. Explain briefly.a. For a typical college student, human wealth and nonhuman wealth are approximately equal.b. Natural experiments,
A consumer has nonhuman wealth equal to \(\$ 100,000\). She earns \$40,000 this year and expects her salary to increase by 5\% in real terms each year for the following two years. She will then
A pretzel manufacturer is considering buying another pretzelmaking machine that costs \(\$ 100,000\). The machine will depreciate by \(8 \%\) per year. It will generate real profits equal to \(\$
Suppose that at age 22, you have just finished college and have been offered a job with a starting salary of \$40,000. Your salary will remain constant in real terms. However, you have also been
Suppose that every consumer is born with zero financial wealth and lives for three periods: youth, middle age, and old age. Consumers work in the first two periods and retire in the last one. Their
Continue with the setup from Problem 5, but suppose now that borrowing restrictions do not allow young consumers to borrow.If we call the sum of income and total financial wealth "cash on hand," then
Consider a consumer who lives for three periods: youth, middle age, and old age. When young, the consumer earns \(\$ 20,000\) in labor income. Earnings during middle age are uncertain; there is a
Go to the FRED database operated by the Federal Reserve Bank of St. Louis. Find annual data for personal consumption expenditures and gross private domestic investment as well as for real GDP. The
Consumer confidence, disposable income, and recessions Go to the Web site of the FRED economic data base and download the quarterly series for real personal disposable income per capita (series name
label each of the following statements true, false, or uncertain. Explain briefly.a. Changes in the current one-year real interest rate are likely to have a much larger effect on spending than
Consider these quotes concerning Federal Reserve policy.a. On January 25, 2012 the Federal Reserve made two announcements. Here are excerpts from each:The announcement about the path of short-term
For each of the changes in expectations in parts a through \(d\), determine whether there is a shift in the IS curve, the LM curve, both curves, or neither. In each case assume that no other
Consider the following statement: "The rational expectations assumption is unrealistic because, essentially, it amounts to the assumption that every consumer has perfect knowledge of the economy."
A new president, who promised during the campaign that she would cut taxes, has just been elected. People trust that she will keep her promise, but expect that the tax cuts will be implemented only
The Focus Box "Can a Budget Deficit Reduction Lead to an Output Expansion? Ireland in the 1980s" provides an example of fiscal consolidation. Ireland had a large budget deficit in 1981 and 1982.a.
Suppose, in a hypothetical economy, that the chairman of the Fed unexpectedly announces that he will retire in one year. At the same time, the President announces her nominee to replace the retiring
As seen in the following table, the 2008 financial crisis left the United States with an enormous federal budget deficit in 2009 .There was a substantial fiscal consolidation from 2011 onward, yet
Label each of the following statements true, false, or uncertain. Explain briefly.a. If there are no statistical discrepancies, countries with current account deficits must receive net capital
Consider two fictional economies, one called the domestic country and the other the foreign country. Given the transactions listed in (a) through \((\mathrm{g})\), construct the balance of payments
Consider two bonds, one issued in euros ( \(€\) ) in Germany, and one issued in dollars (\$) in the United States. Assume that both government securities are one-year bonds-paying the face value of
Consider a world with three equal-sized economies ( \(A, B\), and \(C\) ) and three goods (clothes, cars, and computers). Assume that consumers in all three economies want to spend an equal amount on
The exchange rate and the labor market Suppose the domestic currency depreciates (i.e., E falls).Assume that \(P\) and \(P^{*}\) remain constant.a. How does the nominal depreciation affect the
Retrieve the nominal exchange rates between Japan and the United States from the Federal Reserve Bank of St. Louis FRED data site. It is series AEXJPUS. This exchange rate is written as yen per
Retrieve the most recent World Economic Outlook (WEO) from the Web site of the International Monetary Fund (www.imf. org). In the Statistical Appendix, find the table titled "Balances on Current
Saving and investment throughout the world Retrieve the most recent World Economic Outlook (WEO) from the Web site of the International Monetary Fund (www.imf. org). In the Statistical Appendix, find
Label each of the following statements true, false, or uncertain. Explain briefly.a. The reduction in the current account deficit in Greece from 2008 to 2018 means that citizens in Greece are better
Using the definition of the real exchange rate (and Propositions 7 and 8 in Appendix 2 at the end of the book), you can show thatIn words, the percentage real appreciation equals the percentage
A further look at Table 18-1 Table 18-1 has four entries. Using Figure 18-5 as a guide, draw the situations illustrated in each of the four entries in Table 18-1. Be sure you understand why the
a. Consider an economy with a trade deficit \((N X
Consider an open economy characterized by the following equations:The parameters \(m_{1}\) and \(x_{1}\) are the propensities to import and export. Assume that the real exchange rate is fixed at a
Consider an open economy in which the real exchange rate is fixed and equal to one. Consumption, investment, government spending, and taxes are given bywhere \(Y^{*}\) denotes foreign output.a. Solve
Label each of the following statements true, false, or uncertain. Explain briefly.a. The interest rate parity condition means that interest rates are equal across countries.b. Other things being
Consider an open economy with flexible exchange rates. Suppose output is at the natural level, but there is a trade deficit. The goal of policy is to reduce the trade deficit and leave the level of

Showing 200 - 300 of 1727

1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
Last

Get In Touch

About Us
Contact Us
Career
Jobs
FAQ
Campus Ambassador

Company Info

Security
Copyrights
Privacy Policy
Terms & Condition
SolutionInn Fee
Scholarship

Services

Sitemap
Fun
Definitions
Become Tutor
Study Help Categories
Recent Questions
Expert Questions

Copyright © 2024 SolutionInn All Rights Reserved.

Get the SolutionInn - Study Help App