ECON 104 PS3 - Rian Holland ECON 104 Problem Set #3 Ch. 13:...

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Rian Holland ECON 104 Problem Set #3 Ch. 13: Facts and Tools 7; Challenges 4 7. The inflation rate would decrease with a decrease in the price of oil; Solow growth curve shifts right. 4. To raise employment by 1%, wages would need to rise by approximately 5%. To raise employment by 2%, wages would need to rise by approximately 10%. This “wage-channel” effect unsuccessfully explains the job fluctuations that occur in the real world business cycle due to lack of outside factors besides wage increase. Ch. 14: Facts and Tools 2 and 4 2. a) Monetary base (MB): Currency and reserves held by banks at the Federal Reserve b) M1: Currency + checkable deposits c) M2: M1 + savings deposits + money mark mutual funds + small-time deposits 4. To lower interest rates via open market operations, the Federal Reserve should buy bonds. Ch. 15: Facts and Tools 3 3. a)The Solow growth curve shifts to the left. b) The inflation rate would be lower after the positive real shock. The real growth rate would be higher
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ECON 104 PS3 - Rian Holland ECON 104 Problem Set #3 Ch. 13:...

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