Chapter 10
3. Production function Y = KN
a. If K = 49 and N = 81, Y = 4981 = 7*9 = 63
b. If K and N both double, output also doubles:
98162 = 126, or, in general, (2K)(2N) = 2KN = 2Y
c. Yes, multiplying all inputs by the same factor multiplies the output
Chapter 7 problem set
Question 2. Start at medium-run equilibrium, that is natural level of output and
unemployment. Then suppose there is a tax cut. What happens in the IS-LM model and
what happens in the AS-AD model?
i
P
AS
LM
AS
LM
P1
P0
i1
IS
IS
Y
Yn
Econ 204
7/9/15
The United States financial crisis of 2008 began with a series of subprime loans that
became sold to and pooled together by financial institutions which allowed investors to purchase
packages of these loans known as mortgage-backed securit
Text book Questions
Chapter 3
Q2)
C = 160 + 0.6YD
I = 150
G = 150
T = 100
a. Equilibrium GDP (Y)?
Z=C+I+G
Plug above behavioral functions into this equation, which gives you,
Aggregate function : Z = 160 + 0.6(Y-100)+150+150 = 400 + 0.6Y
Equilibrium condi
204A Intermediate Macroeconomics (Discussion session)
Dec. 8th 2011
Announcement
1. Final exam: Dec 13th, 10:30 12:30, Thompson hall 106
2. I will hold extra office hour on next Monday.
You can use either time slot: 10-11am or 4-5pm.
3. Discussion today (
Chapter 19 Homework Answer Key
Question #2: Real and nominal exchange rates and inflation
Using the definition of the real exchange rate (and Propositions 7 and 8 in Appendix 2 at the end of the book), you
can show that
In words, the percentage real appre
Chapter 20 HW Answer Key
2. Consider an open economy with flexible exchange rates. Suppose output is at the
natural level, but there is a trade deficit. What is the appropriate fiscal-monetary policy
mix?
We will take appropriate to mean that the policy g
Chapter 11
Paradox of savings/long run growth question:
The paradox of savings is the name for a conclusion we reach in our short run incomeexpenditure equilibrium analysis of the savings rate: If the savings rate increases, this
causes consumption to fal
Chapter 3 problem set answer key
Question 2
C = 160 + 0.6YD
I = 150
G = 150
T = 100
Solve for the following variables:
a. Equilibrium GDP (Y)
Option 1: Use equation 3.8 and substitute in the given parameters.
Option 2: Write down the equilibrium condition
Text book Questions
Chapter 3
Q2)
C = 160 + 0.6YD
I = 150
G = 150
T = 100
a. Equilibrium GDP (Y)?
b. Disposable income YD ?
c. Consumption spending (C)?
Q3) use the above equations
a. Solve for equilibrium output. Compute total demand. Is it equal to
prod
Econ 204 Chapter 6 Homework Answer Key
Problems #3 and 6
QUESTION 3: The natural rate of unemployment: Suppose that the markup of goods prices over marginal cost is
5%, and that the wage-setting equation is W = P(1-u), where u is the unemployment rate.
a.
Chapter 18 Answer Key
2. As an example, see the construction of the balance of payments balance sheet on p.387.
Balance of Payments in domestic country (For foreign country, reverse all signs)
Current Account
Exports
$25 (b)
Imports
$100 (a)
Trade balance
CHAPTER 8 HOMEWORK: Qs 2, 8, & 9
Question 2
a. This statement is not necessarily true: see pages 166-169 for discussion of why since the 1970s we do
not see the original Phillips curve relationship reflected in the economy.
b. This strategy does not work
9/14/16
Revolution (Keynesian)
Classical School
3 Sets of Ideas-
Market Clear Automatically- S = D
i.
Product Market
Says Law- supply creates its own demand
ii.
Labor Market
iii.
Capital Market
I=S
iv.
Money is neutral
Quantity theory of money
MV=PQ
v.
Ma
Econ 204 notes 9/12/16
Macroeconomics came about around 1930 after the stock market crash due to the ripple effects it
had on the economy from the banks crashing
More than 25,000 banks crash in the span of 2-3 years by 1932
Unemployment rate 1929 25%
3 ec
9/19/16
Keynes(new ideas)
1. Product Mkt Labor Market
Level of output level of employment
Aggregate demand determines the level of output
2. Capital Mkt
S (savings) function of Y (current disposable income)
Savings are determined by current disposable inc
Chapter 5 problem set answer key
Question 2
Part a
C = c0 + c1(Y - T)
I, G, T given
Equilibrium output:
Y = c0 + c1(Y - T) + I + G
Y = (c0 - c1T + I + G)/(1 - c1)
multiplier = 1/(1 - c1)
Part b
C = c0 + c1(Y - T)
I = b0 + b1Y - b2i
G, T given
Y = c0 + c1(
Econ 204
Chapter 4 Homework Answer Key
3. Consider a bond that promises to pay $100 in one year.
a. What is the interest rate on the bond if its price today is $75? $85? $95?
We use this formula (from pg. 71):
! =
$"#!$!
$!
If the price is $75:
! =
$"#!
Econ 204
7/8/15
2.
a)
Y=c0+c1(Y-T)+I+G
Multiplier=1/(1-c1)
b)
Y=c0+c1(Y-T)+(b0+b1Y-b2i)+G
New Multiplier= 1/(1-c1-b1)
Effect in change in autonomous spending is greater than that in part A because investment is
now effected as well.
c)
i=(d1Y-(M/P)/d2
Y=c
Question 3
a.)
b.)
c.)
d.)
e.)
Y =63
Y is doubled (Y = 126)
Yes
Y/N = (K/N)1/2
K/N = 4
Y/N = 2
K/N = 8
Y/N = 2.83
f.) No
g.) No
h.) Yes
Question 6
a.)
Japan (1951 1973) = 4.70%
United States (1951 -1973) = 2.19%
Japan (1974 2010) = around 1%
United States
Econ 204
7/7/15
3.
a)
i=(100-Pb)/Pb
Pb:75, i=0.333, (33%) 85, i=0.176, (18%) 95, i=0.053, (5%)
b)
The price of the bond (Pb) is equal to 100 divided by 1 plus the interest rate (i),
or Pb=100/(1+i)
c)
Pb=100/(1+i)
Pb=100/(1+8)
Pb=100/(9)
Pb=11.111 dollars
Chuqiao Huang
Alex Mozell
Macroeconomics
March 07 2016
Federal Reserve Hikes
For recently ten years, decade federal interest rates in America is not exist start from 2008
financial crisis. The federal reserve start to entertained the idea of many individu
Supplemental Study Questions for the Midterm Exam (to be combined
with study questions for Quizzes 1 and 2)
2*.1. Give short, concise definitions of the following:
a. isoquant- Collection of all baskets of inputs that produce the same
output.
b. total pro
Econ 204
2/1/2016
Inside Job Analysis
The men who destroyed their own companies and plunged the world into
crisis walked away from the wreckage with their fortunes intact (77:38). Matt
Damon stated this quote, emphasizing that the financial crisis of 2008
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Question .3 [50 points
Consider that the Federal Resene Elanli: decidestci undertake a largescale asset purchase resulting in an increase in
m ciney su p-ply.
a. 1iI'iI'hatiiyoulo be the eiect ofsuch a policy on equilibrium interest rate in the money mark
1. l
Ah economy is represented by the following system of equations and identities:
s=5+o.?sr;r =YT
1= lsnmi
G = 250;T=2i
d:
M
Money demand: (F) = Y 511i
M
M0113? supply: 3 = TED
C is private oons umption, "f income, T taxes, I business investment, [3 gov
Question .1. [50 points
a. Explain howa crisis that originated in the nancial sector rapidly.r spread to the real sector in the US in 200?
03. ftpomrst
o. Explain howthe Emit-08 crisis in the US generated a global nancial and economic crisis; that is, exp
uesijon .2 [50 points
Suppose that the gayemment increases public expenditure with no change in taxes.
a. 1il'il'hatwould be the eiects oilhis policy [the decrease in governmentspending on equilibrium oulput in the
goods market? Explain howand why eouilil