Assig3_A

Assig3_A - University of Southern California Department of...

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University of Southern California Department of Economics ECON 205 Principles of Macroeconomists Spring 2009 Prof. Safarzadeh Assignment #3_A Student Name: . ...................................... I- In each problem below, you are to illustrate the market for loanable funds with the appropriately shaped standard demand and supply curves. In each case, draw the shift in the demand and supply which result from the actions taken in the market or changes in related variables. Indicate in the space provided whether each variable and demand and supply will increase (+), decrease (-), remain unchanged (0), or have ambiguous sign (?). Please, number the curves so that the direction of each shift will be clear. Mark the original equilibrium by E 1 and the final equilibrium by E 2. Also, assume that none of the curves are perfectly inelastic or perfectly elastic i.e., the standard demand-supply model. Textile is assumed to be a normal good. 1- Government reduces taxes on income earned from saving. 2- Government increases investment tax credit. 3- Government increases deficit spending.
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4- The prospect of higher unemployment has increased the marginal propensity to save by the households. 5- Government increases deficit spending, while the prospect of higher unemployment increases the marginal propensity to save by the households. 6- Government adopts deficit reduction policy. Households’ marginal propensity to save decreases.
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7- Households’ marginal propensity to save decreases. Government lowers taxes on income earned from saving. 8- There is expectations lower income in the future. 9- Government increases deficit spending. Public have expectations of lower income due to worsening recession.
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II. Select the best answer to the following questions: For the next two questions, assume the following: The U.S. non-institutional civilian population is 250 million, of which 100 million are employed and 10 million are unemployed. 1. Based on the data above, the unemployment rate is a. 4%.
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This note was uploaded on 09/02/2009 for the course ECON 205 taught by Professor Kamrany during the Spring '07 term at USC.

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Assig3_A - University of Southern California Department of...

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