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Unformatted text preview: Economics 420 - Spring 2010 Mike Aguilar Intermediate Theory: Money, Income & Employment UNC at Chapel Hill HW # 4 Due - 02/22/2010 Instructions : • Please explain your answers thoroughly and show all necessary work. • State your assumptions carefully. • There may be more than one correct solution. • Please type your answers whenever possible. • Students may work together, but each must submit their own work. • The honor code is in effect. • Note: Maintain a ceteris paribus assumption when interpreting all shocks. 1. (5pts) (a) Use the table given below to estimate the marginal propensity to consume. Year C T Y 2005 8819.0 2153.6 12638.4 2009 10092.6 2104.6 14258.7 where the units are billions of dollars. (b) Suppose you are a Keynesian economist advising the U.S. President on the fiscal policy required to stimulate the economy. The President’s goal is to restore real GDP to its Q4‘07 level. Taking the s.a.a.r real GDP in Q4‘09 as a reference point, and using the MPC found in part a, how muchthe s....
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This note was uploaded on 11/02/2010 for the course ECON 420 taught by Professor Hill during the Spring '08 term at UNC.
- Spring '08