HW4 - University of Minnesota Department of Economics Econ...

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University of Minnesota Department of Economics Econ 3102 – 001: Intermediate Macroeconomics Homework 4 This problem set (PS) is due on Wednesday, November 26 at the beginning of class. The maximum score is 103 points. Be sure to review the Syllabus about homework assignments and their grading. Feel free to contact me via e-mail if you have specific questions about the HW assignment. Note that some Exercises have several parts, and each part may conceal more than one task for you. Be sure to answer every question thoroughly for full credit! Question 1 (14 points) Graphically derive all the diagrams(labor market, goods market, money market) of the real inter-temporal model of chapter 10. Make sure to justify the shapes of all the curves you draw. Question 2 (18 points) Consider the real business cycle model: a) What is the motivation behind the model? ( Hint : TFP) b) Graphically illustrate what happens if both z and z 0 go up. c) Is this model able to explain procyclicality of nominal money supply? If yes, prove this. If no, what
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HW4 - University of Minnesota Department of Economics Econ...

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