eCON 104 HW 4 - NAME_Farious Ressom [email protected] ECON 104 EMAIL_fjr50Date Due Tues 11/3 HOMEWORK 4 This assignment is due at the beginning of class on

# eCON 104 HW 4 - NAME_Farious Ressom [email protected] ECON 104...

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NAME _Farious Ressom___________________________ EMAIL:_fjr50- [email protected]___________________ ECON 104 D ate Due : Tues, 11/3 HOMEWORK 4 This assignment is due at the beginning of class on Tuesday , November 3. It is worth 12 participation points. No late assignments will be accepted. If you cannot make it to class on Tuesday , please have a friend or classmate drop it off at the beginning of class on 11/3. If you have to be out of town, you can pass it in early (on 10/27, 28, 29) during office hours. Instructions: This assignment must be typed. Graphs can be filled in by hand . You can work together; however, you are expected to write up your answers in your own words individually. Please be as brief as possible. I have given you a rough guide in terms of number of sentences—we will not be counting the number of sentences you write. Please read, “Stocks Rally Out of Correction Territory on Latest Central Bank Boost” , Paul Vigna, WSJ, October 23, 2015, posted in the Exam 2 materials folder. 1. Suppose the European economy is at E 1 (Q 1 , 2%). . Using the graph below, illustrate how actions by the European Central Bank (ECB) to lower interest rates (i.e., increase the money supply) later this year will impact real interest rates in Europe. Mark the new equilibrium, E 2 , and the new quantity, Q 2, and real rate, r, at E 2 . (Make up the new r.) European Loanable Funds Market 2% Q 1 Supply Demand E1 Real Interest Rate, r Loanable Funds (\$Billions)
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