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
Toggle navigation
FREE Trial
S
Books
FREE
Tutors
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
Ask a Question
AI Tutor
New
Search
Search
Sign In
Register
study help
business
principles of macroeconomics
Questions and Answers of
Principles Of Macroeconomics
Use this chapter and your own knowledge and further research to answer the following questions:(a) Is Keynes' treatment of expectations consistent with the rational expectations hypothesis?(b) What
Collect data on inflation and unemployment for the UK and the US during the 1970s and 1980s using OECD.Stat. The 1980s was a period of significant disinflation for the two economies. Use the data
Assume that inflation expectations are formed rationally. Use the 3-equation model to show the adjustment of the economy to a permanent demand and a permanent supply shock. Provide a period by period
This question uses the Macroeconomic Simulator available from the Carlin and Soskice website http://www.oup.com/uk/orc/carlin.soskice to show how central bank credibility affects the adjustment of
Why do saver households not lend directly to borrower households? How can banks help solve this problem?
What happens to the money supply and to aggregate demand when confidence in financial markets is boosted? Assume the policy interest rate stays the same throughout. Illustrate your answer using a
Why are loans to households and firms considered risky? Make sure you refer to and explain the following terms in your answer:a. Uncertainty.b. Moral hazard.c. Asymmetric information.
Are the following two statements both true or is only one of them true? Justify your answer.S1. The bank lending rate will increase the riskier loans are perceived to be.S2. Given \(\mathrm{S} 1\),
The following four borrowers are categorized according to their level of wealth and the quality of their proposed investment project. Which of the borrowers will receive a loan from the bank for
Is deposit insurance always a 'good thing'?
Set out a simple balance sheet for a single commercial bank (as in Fig. 5.9). Define each item in turn and discuss why that item has been labelled as an asset or a liability. Why is net worth on the
What are the channels through which banks can fund their lending? In the model presented in this chapter, can banks influence the level of aggregate demand in the economy?
What are the key differences between the way that monetary policy is conducted in the 3-equation model (from Chapter 3) and in the 3 -equation model with the banking system? Does this change the
Use the 3 -equation model to show the impact of a reduction in consumer confidence on the economy. Make sure you show the period 1 mark-up on your diagram and discuss what happens to both the policy
Collect the annual report of a US commercial bank from 2006. Find the consolidated balance sheet and condense it into a form similar to the Barclays' balance sheet shown in Fig. 5.10. Answer the
Use central bank websites to collect data on monthly policy rates and morgage rates in two developed economies between 2000 and 2012. Plot the data on graphs, as per Fig. 5.4. Answer the following:a.
In the wake of the global financial crisis, there has been a lot of discussion about whether banking is 'socially useful'. Use the simple model of the macro-economy and the financial system to
The UK government introduced lending targets for the five major UK banks after the global financial crisis. Use the simple model of the macro-economy and the financial system to discuss this policy.
Explain the role of the following factors in the upswing in the financial cycle that preceded the global financial crisis:(a) The implicit state guarantee for 'too-big-to-fail' institutions.(b) The
Why did rising house prices make US retail banks more willing to provide morgages for low-income earners with poor credit histories?
Assess the following statements S1 and S2. Are they both true, both false or is only one true? Justify your answer.S1. The European global banks did not dramatically increase the risk in their loan
Assume that an investment bank is at its maximum desired leverage of 20 : it has \(\$ 10\) million of its own equity (net worth) and has borrowed \(\$ 190\) million to buy assets of \(\$ 200\)
The following quote about the financial system is taken from Alessandri and Haldane (2009): 'Although diversification may purge idiosyncratic risk, it simultaneously reduces diversity andthereby
Explain the difference between a bank having a liquidity problem and a solvency problem. How does each problem affect a bank's balance sheet?
Use yield curve diagrams to explain how conventional (i.e. adjusting short-term interest rates) and unconventional (i.e. quantitative easing) monetary policies aim to influence the level of aggregate
Evaluate the following statement: 'Discretionary expansionary fiscal policy should not be used in an economic downturn, because this will lead to tax rises and spending cuts in the future that will
What policy mistakes were made in the Great Depression? How can these mistakes be shown using the 3-equation model? Show in a diagram how fiscal stimulus could have averted a deflation trap.
Discuss the following statement: 'Balance sheet recessions involve a debt overhang, hence the government should impose austerity to reduce the debt burden'.
Pick three financial institutions, one from the US, one from the UK and one from Continental Europe. Download their annual reports for a pre-crisis year (i.e. before 2008). Use their balance sheets
Select two economies (outside of the G7 and the Eurozone). Use OECD. stat and the IMF World Economic Outlook database to gather data on key macroeconomic variables and policy responses of these two
'One way of reducing the likelihood of encountering the Zero Lower Bound problem is to have a higher inflation target.' Discuss. In your answer, refer to the role of inflation expectations in the
Making reference to historical precedent, propose and defend a combination of monetary, fiscal and supply-side policies that would have speeded up the exit of the British economy from the Great
Assess the following statements \(S 1\) and \(S 2\). Are they both true, both false or is only one true? Justify your answer.S1. A rise in the saving rate will plunge the economy into recession.S2. A
How will an inflation-targeting central banker react to a fall in the savings rate? Answer very briefly using the 3 -equation model and then extend your analysis using the standard Solow diagram to
Using the data in Table 8.1, calculate the following:(a) The CAGR for US GDP per capita between 1950 and 2010.(b) The time it would take for US GDP per capita to double if it grew at the rate
Use Equation 8.6 to derive the steady state values of capital per worker and output per worker in the standard Solow model. Interpret these equations.
Discuss the following statement: 'increasing the savings rate in the economy always increases welfare as it leads to an increase in output per capita'.
Assume we are in a Solow world in which the population is growing at a constant rate (and there is no technological progress). Suppose from an initial steady state, there is a sudden fall in the
In the course of answering this question, explain the concepts of absolute and conditional convergence.(a) Explain the mechanism(s) through which, according to the Solow model, an initially poor
How do endogenous growth models explain the persistence of differences in living standards among economies? Explain the role played by the production function for goods and the accumulation function
What does the term 'creative destruction' mean? In a Schumpeterian growth model, what determines the growth rate of productivity? How does this compare to the mechanism driving growth in the Solow
Assess the following statements \(S 1\) and \(S 2\). Are they both true, both false or is only one true? Justify your answer making reference to the objectives of the policy maker.S1. Economic policy
In an economy characterized by a Cobb-Douglas production function (without technical progress), labour's share of income is \(70 \%\) and the depreciation rate is \(3 \%\) per annum. The economy is
Download data on GDP per capita between 1950 and the latest available period for two countries of your choosing (other than the USA) from the latest version of the Penn World Table. Calculate the
Study Table 8.2. Use the information in the table (and the paper it is taken from) to write a one page note on the role of innovation in the evolution of the EU and US economies since 1980 .
'More competition and stronger protection of IPR (intellectual property rights) will speed up technological progress.' Is this a recommendation you would take to a policy maker? You have 700 words to
Use a UIP diagram to illustrate the following cases. Discuss the adjustment process in each case and show how it relates to the UIP equation.(a) Home's interest rate falls below the world interest
Answer the following questions about the supply and demand sides in the medium-run model:(a) What does the ERU curve represent? What would happen to the \(E R U\) curve if unemployment benefits were
What conditions need to hold for a small open economy to be in medium-run equilibrium?
In a small open economy, is a negative supply shock or a negative demand shock more damaging for medium-run output? Explain in words and use AD - ERU diagrams to back up your argument. Describe the
Use the 3-equation open economy model to answer the following questions:(a) Explain what the following statement means: 'after a demand shock in a small open economy, the exchange rate often
Is the following statement true or false? Explain your answer. 'Central banks have to be more aggressive when making interest rate changes in the open economy because the IS curve is steeper than in
Consider a large negative demand shock that hits two small economies. The economies are identical except that one is closed and the other is open. Answer the following:(a) Briefly explain how a large
Compare the decision making process taken by the central bank (and forex market in the open economy) in a closed and open economy after a permanent positive supply shock. Create a table similar to
Explain what is meant by this statement: 'The behaviour of the nominal exchange rate in the model is a residual'.
This question uses material from Sections 9.5 . 2 and 9.5 .4 of the Appendix. For a benchmark case, draw the \(P C-M R\) and the \(I S-R X\) diagrams after an inflation shock. Now increase the
'Following an announcement from the Riksbank (the Swedish central bank) of an interest rate increase, an immediate depreciation of the Krona was observed'. How can you explain this outcome? In your
The Bank of England keeps a directory of the minutes from the monthly meetings of their Monetary Policy Committee
Assume you are in a small open economy with flexible exchange rates. The economy experiences a permanent positive demand shock.(a) Draw the \(P C-M R\), the \(I S-R X\) and the \(A D-E R U\) diagrams
This question uses the Macroeconomic Simulator available from the Carlin and Soskice website http://www.oup.com/uk/orc/carlin-soskice to model supply-side reform in the open economy. Start by opening
This question uses material from Sections 9.5.2 and 9.5.4 of the Appendix. The parameters that underlie the economy are \(a=b=\alpha=\beta=1\), which implies that \(\lambda=0.5\). The economy is
Explain the difference between the closed and open economy IS curves. Which curve is steeper? Explain both in words and with reference to equations why this must be the case.
Explain the sense in which an improvement in price competitiveness might be considereda 'good thing' for the economy. Might it also be considered a 'bad thing'? Is an improvement in the terms of
Construct a numerical example to show how the Marshall-Lerner condition works. Why might its predictions not hold in the very short run?
How does the price-setting real wage equation differ in the case where you assume (a) a vertical \(E R U\) and (b) the downward-sloping \(E R U\) curve? Show how the price-setting real wage is
Are real wages higher, lower or unchanged in the new medium-run equilibrium followinga cut in unemployment benefits? Explain your answer.
Compare an economy with a vertical \(E R U\) curve with an otherwise identical economy with a downward-sloping \(E R U\) curve. Briefly explain how these economies differ. Consider a government
Assume the home economy is a small open economy. It initially starts in trade balance with output at equilibrium. There is a sudden shift in preferences away from the home country's exports and
Explain in words with the help of a diagram (with a \(q-y\) panel) why the BT curve is flatter than the \(A D\) curve. Show the result using equations.
What is the inflation rate in medium-run equilibrium in a fixed exchange rate economy? How will deviations in inflation from this rate affect the country's competitiveness?
A small open economy with flexible exchange rates is having trouble controlling inflation. What options does it have for establishing a credible low inflation monetary regime? Are there any downsides
Use the website of The Economist magazine and search for the latest version of the 'Big Mac Index'. Answer the following questions:(a) What does the index show and how does it relate to the concept
Use the content of this chapter and Chapter 9 to answer the following questions:(a) How would you expect an inflation-targeting central bank to respond to a fall in world trade? Explain the central
This question uses content from both this chapter and Chapter 9. Read the following excerpt from Economic luck that cannot last:24 'The governor [of the Bank of England, Mervyn King] emphasizes four
Pick a large Eurozone economy (e.g. France, Spain, Germany or Italy). Perform a short case study on the performance of your chosen economy between the mid-90s and the mid-2000s by following these
Explain using words and diagrams how an oil shock can be considered both a demand shock and a supply shock.
Use Section 11.2.1 to answer the following questions about the oil price shocks of the 1970s:(a) How did the misdiagnosis of the oil shock of 1973/74 affect policy choices and economic
Oil prices fell dramatically in 1986. Use the WS - PS and ERU diagrams to explain the effect of this supply-side shock on a small open economy. At the initial real exchange rate, what has happened to
Assess the following statement: 'the 2002-08 oil shock had less negative macroeconomic consequences than those in the 1970s due to the success of inflation-targeting central banks at stabilizing
A small open economy is initially in trade balance. There is a temporary increase in household income for one period (i.e. rise in \(\widetilde{y}_{t}\) ). What effect does this have on the current
What is meant by the term 'Dutch disease'? How does this relate to the intertemporal model of the current account?
Discuss the political and economic forces that could move a small open economy towards trade balance in the long run.
Use an \(A D-B T-E R U\) diagram and the sector financial balances framework from Section 11.2.3 to show how a country whose government is restricting domestic demand could run 'twin surpluses' (i.e.
Use Section 11.2.5 to answer the following questions about macroeconomic imbalances in the 2-bloc model:(a) Use a 2-bloc model to explain in words how there can be constant inflation in each bloc but
Why is it not possible for all countries to follow a demand-focused (i.e. expansionary) growth strategy? How did differing growth strategies across economies with global impact help current account
Use the online series for real oil prices from the Carlin and Soskice webpage http://www.oup.com/uk/orc/carlin.soskice. Pick an emerging and a developed economy and collect data from their national
Assess the following statement: 'economic policy makers should not directly intervene to reduce current account imbalances, because they simply reflect rational savings decisions and comparative
Set out the IS - RX and \(P C-M R\) diagrams for bloc \(A\) and bloc \(B\) (as per Fig. 11.16) and the associated impulse response functions (as per Fig. 11.17) for the case where there is a positive
Use the mathematics from Section 11.4.1 of the Appendix to derive the \(R X\) curve after a negative demand shock in bloc \(B\).
What are the microeconomic benefits of a currency union?
Germany had a credible central bank before the introduction of the euro. What was their macroeconomic incentive to join the currency union? Was this incentive shared by the countries in Southern
Explain the factors that contributed to the difference in inflation rates between Germany and Spain between 1999 and 2008. What effect did this differential have on the external competitiveness of
What are the two pillars of the ECB's monetary policy? Discuss the pros and cons of the ECB's strategy.
Use your knowledge of common currency areas (CCAs) to assess whether the following statements (S1 and S2) are both true or whether only one of them is true. Justify your answer:S1. If country \(A\)
Explain the difference between the real exchange rate channel and the real interest rate channel. Which of these channels has to dominate for the economy to revert to equilibrium after a shock
What is the Walters' critique and why was it used as an argument for the UK not joining the single currency?
Use the 3-equation model to show how fiscal policy can be used to stabilize the economy after a positive demand shock in a country that is a member of a CCA. What effect does this have on the budget
Use an \(A D-E R U\) diagram to show the new medium-run equilibrium of a flexible exchange rate economy and a member of a CCA following a negative demand shock. Assume that the CCA member uses fiscal
How could the 2-bloc model from Chapter 11 be used to shed light on the economic divergence between the Northern and Southern European countries during the first ten years of the single currency?
Describe why the following factors made the Eurozone vulnerable to a sovereign debt crisis:(a) Member countries issued debt in a currency they did not control(b) National governments were responsible
Showing 1 - 100
of 537
1
2
3
4
5
6