Final Examples late 90s - AQISQ9 Art Benavie Econ 130 Final...

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Unformatted text preview: AQISQ9' Art Benavie December 10, 1999 Econ. 130 Final Exam (Symbols defined on request.) (Show your work.) 1. Assume the following estimated behavioral coefficients: Ac Al Ar Ac £1 ANX ADI ' A_Y=48’ A—Y= '3’ AP —=‘50’ Ar=q30’ AY =-'1 Ar : * 10, AY = . , “—AP = - , A8 I 50, A—Y -— —1/40 and LRRR— — H2 In addition, assume that the initial equilibrium values are: Y = 1000, M = 500, P = 1, r = 8%, the budget deficit— — 150, and the trade deficit = 200. Now, assume the following autonomous changes: AT: - 50, AN — —2, AP = - .,2 and Ar = +1%. Given this information compute the following: A5 A. M B AE C. The value of the multiplier D. The equilibrium change in Y, and the total equilibrium changes in the budget deficit, the trade deficit, nominal M, real M, and the total required open market action (indicate whether a purchase or sale and how much). E. Graph this problem, showing both deficits, the money market, and the YD and P schedules. Show on your graphs, using the magnitudes you have computed, the initial and final equilibrium values for Y, real M, CHI/J [i=7/ and both deficits. Make sure and show the magnitude of the shift in each displaced schedule as well as the magnitude of the movement along each schedule, using the numbers you have computed. 2. Explain the reasoning behind the following behavioral assumptions. A "XE-<0 AC B K5<0 ANX C Egr> Al D E<O ANX E “3'3": 3. Suppose the economy is at full employment equilibrium and the Congress and the President decide to increase government spending on public investments by $50 billion. Assume that Greenspan and the Federal Reserve Board institute a monetary policy which successfully prevents any autonomous change in aggregate demand. Given the estimated behavioral coefficients in question 1, compute the following: A. The required A? B. The equilibrium ATD C. The equilibrium AI D. The equilibrium ANT E. The equilibrium AI) F. The equilibrium ANS Write a paragraph explaining the social benefits and costs of this policy, and in your answer give a couple examples of private vs public investment. Art Benavie December 11, 1998 Econ. 1 30 Final Exam (Symbols defined on request.) 1 . In the " slack model" (that is, where P is autonomous) assume the following estimated behavioral coefficients: .-.¢(AC,AYD) = .6, A] AT AC AI ANX A1. A1. are“, K17: 2’ “[19:60, Tic-30, "Fr-15’ TN“ 10: zeal, —-—— 80 —' X 50 'dIRRR 2 AP _- , Ae — an . =. . in addition, assume that the initial equilibrium Y z 1000, M = 500, P = 1, r = 8%, the budget deficit = 150 and the trade deficit m 200. Now, assume the following autonomous changes: AT = — 50, AP = ~ .2, and Ar = +1%. Given this information, compute the following: g; A. M B. AB C. The value of the multiplier D. The equilibrium change in Y, and the total equilibrium changes in the budget deficit, the trade deficit, nominal M, real M, and the total required open market action (indicate whether a purchase or sale and how much). E. Graph this problem, showing both deficits, the money market, and the YD and P schedules. Show on your graphs, using the magnitudes you have computed, the initial and final equilibrium values for Y, real M, and both deficits. Make sure and show the magnitude of the shift in each displaced schedule as well as the magnitude of the movement along each schedule. using the numbers you have computed. 2. Explain the reasoning behind the following behavioral assumptions. A KF<O AC _ B EF<O ANX C. Ae > Al D EF<O 3. Suppose the economy is at full employment equilibrium and the Congress and the President decide to increase government spending on public investments by $100 billion. Assume that Greenspan institutes a monetary policy which successfully prevents any change in aggregate demand. Given the estimated behavioral coefficients in question i, compute the following: A. The required Ar B. The equilibrium. ATD C. The equilibrium Al D. The equilibrium ANI E. The equilibrium Al) F. The equilibrium ANS Explain the social benefits and costs of this policy and in your answer give a couple examples of private vs public investment. ...
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