Midterm 1, Question 1 Solutions
February 28, 2013
A.)
i.) (7 points) Since national saving can be written as S = Y C (Y T ) G, if C falls for
any level of disposable income, then national saving will rise. With national saving (supply
of loanable funds) i
Solutions to Midterm 2
Spring 2013
Macro Theory
Question 1
A.) (7 points) First, note that since
y=
( 1 )
s
,
+n
an increase in the saving rate, s causes steady state output per worker to rise (because steady
state capital per worker rises). Note also tha
Question 1
A. True.
Given capital and labor shares, (1 $)Y goes to Ls units of skilled labor
and Lu units of unskilled labor, and $Y goes to Ls units of skilled. In total,
$Y+( (1Ls$)Y )Ls goes to Ls units of labor, and goes to ( (1Ls$)Y )Lu goes to
( +Lu
Macro Theory
Spring 2012
Final Exam
You have three hours for this exam. There are six questions with
equal weights. Write your answers in the spaces under the
questions, continuing on the back and the following blank page as
necessary.
Your name:
Answers to 1st Midterm (Spring 2012)
March 03, 2012
Question 1 (25 points in total)
Part A (13 points)
The government increases taxes (T) and keeps its spending (G) constant (7
points)
To determine the eect of this policy on the equilibrium levels of the
Question 1
A.
Here is the ISLM Model:
Y = C (Y T ) + I (r) + G
(1)
M
= L(r + e , Y )
P
(2)
1. If central bank raises the money supply, LM curve will shift to right, but IS curve will remain unaected
by this policy change.
2. A good answer for this part ha
Question 1
A. Assume the basic ISLM model from lectures. Suppose the central bank
raises the money supply, M.
(i) Say what curve(s) (IS or LM) shift, and in what direction.
(ii) Carefully show why the curve(s) shift as they do. You can use
either math or
Question 1
A. Assume the basic ISLM model from lectures. Suppose the central bank
raises the money supply, M.
(i) Say what curve(s) (IS or LM) shift, and in what direction.
(ii) Carefully show why the curve(s) shift as they do. You can use
either math or