73-240 Fall 2016
73-240 Problem set 2 Answer Key
Problem 1: Nominal GDP, Real GDP, Price Indices,
and Inflation (50 pts)
Consider the following economy where only pizzas and soda are produced. Production and
prices in year 1 and year 2 are given in the fo
73-240 Fall 2016
73-240 Problem set 3
Due Friday Sep. 23rd
Problem 1: Capital Shares over time (40 points total)
Consider the Cobb-Douglas production function:
Y = zK N 1
where is the share of capital in the production function.
A Write down the problem o
Profit Maximization:
Economic profit generated by the production plan (x1, y1) by = p1y1 w1x1.
x1: number of labor units used / hour
y1: number of cars produced / hour
Output and input levels are typically flows; hence, profit is typically a flow.
Valu
Cost Minimization:
c(y) is called total cost function; it denote the firms lowest possible total cost for producing y units
of output.
The cost-minimization problem is: min w1x1 + w2x2, subject to f(x1, x2) = y
Minimized total cost of producing y is:
o
Supply Functions:
Firms choice of how much output to produce is the firms supply. It depends on profit, production
function, and market environment. Monopoly: just one seller that determines the quantity supplied
and the market-clearing price. Oligopoly:
Homework #4
Part II:
a) The first justification for constant return to scale is empirical. If one estimates production
function (e.g. a Cobb-Douglas production function), empirical estimates of a and b is such that a
+ b = 1.
Another justification if ther
One time change in the money supply, after the system adjusts, none of the variables change
- k does not change!
Permanent change (rate of growth)
- Price go up by 10%, wage go up by 10%
- To keep the real interest rate constant (moneys purchasing power g
Notes after prelim 2
July 29:
The value of the firm is not its historical cost, but its the cost of replacement. Really, the value of
corporation, including not just the physical capital, but also intellectual capital. The point is that
you dont have dir
24.1 What is the Credit Market?
Borrowers and the Demand for Loans
Debtors: economic agents who borrow funds - including entrepreneurs, home buyers, and
medical students
Credit: refers to the loans that the debtor receives
Most businesses and individua
Chapter 23: Employment and Unemployment
23.1 Measuring Employment and Unemployment
Classifying Potential Workers
To determine who is employed and unemployed, we start by identifying the population of
workers whose employment behavior we want to measure
Chapter 19: The Wealth of Nations
19.1 Macroeconomic Questions
Macroeconomics: study of economic aggregates and economy-wide phenomena, like the
annual growth rate of a countrys total economic output, or the annual percentage
increase in the total cost o
Chapter 21: Economic Growth
21.1 The Power of Economic Growth
Growth rate: change in a quantity - here, GDP per capita - between two dates, relative to
the baseline quantity
If we choose two dates, say t and t + 1, and denote GDP per capita in these two
20.1 Inequality Around The World
Measuring Differences in Income per Capita
Dividing GDP by the total population in the country gives us income per capita (per person) or
GDP per capita
Using an exchange-rate based measure, we can compute income per cap
BUSINESS ENGLISH REPORT PROJECT SAMPLE
http:/www.monash.edu.au/lls/llonline/writing/information-technology/report/1.3.3.xml
-BUSINESS ENGLISH REPORT PROJECT
SCANNERS: ISSUES OF TECHNOLOGY AND BUSINESS
Compiled by (student name)
Supervised by (teachers nam
1. Which of the following statements is true?
o The center of a confidence interval is a population parameter
o The center of a confidence interval is a sample statistic
o The bigger the margin of error, the smaller the confidence interval
o The confidenc
MACROECONOMICS
73-240
Lecture 25
Shu Lin Wee
This version: December 7, 2015
Plan for This Lecture
1) Understanding Equilibrium in the Extended 2 Period Model
Aggregate Output Supply
Aggregate Output Demand
2) Effect of shocks on Macroeconomy
Government sp
MACROECONOMICS
73-240
Lecture 12
Shu Lin Wee
This version: November 1, 2015
Plan for This Lecture
Goal: Understand optimal (micro!) savings decision of the
representative household
The two period model: the household
Inter-temporal budget constraints
Opti
73-240 Fall 2015
73-240 Lecture 26: Review Final
1
Format of Final Exam
10 Short-Answer Questions (6 points each)
Should not take you more than 4 minutes to complete each question
Choose 10 out of 12 questions
Coverage: cumulative
3 Long-Answer Probl
MACROECONOMICS
73-240
Lecture 23
Shu Lin Wee
This version: November 29, 2015
So far
Weve focused on the 2 period household model
1) where income today and tomorrow, y and y 0 , are exogenous
2) Used the model to understand how households consumption and
s
73-240 Fall 2015
73-240 Lecture 20: Ricardian Equivalence
1
Questions we want to ask
Suppose the Government wants to finance some government spending, does the choice
of financing - using tax revenue or issuing debt - matter?
2
The 2 Period Government
Ju
MACROECONOMICS
73-240
Lecture 7
Shu Lin Wee
This version: September 23, 2015
Slide 1 of 39
Gauging the Economy
Median household income held at $53,660 in 2014, no statistical
dierence from 2013
Jobs growth has picked up, but real median household income
73-240 Fall 2015
73-240 Lecture 20: Two Period Household Model with Credit
Frictions
1
Questions we want to ask
Do individuals from different income groups exhibit different sensitivities in consumption spending with respect to income changes?
Measuring
MACROECONOMICS
73-240
Lecture 21b
Shu Lin Wee
This version: November 18, 2015
Plan for this Lecture
Banks, Panics and Bank Runs
What do banks do?
Theory of Liquidity Provision
Financial Panics
Banks: What they Do
Three Theories of Banks
Safe keepers
Provi
73-240 Fall 2015
73-240 Lecture 19: Two Period Household Model
1
Questions we want to ask
Do individuals from different income groups exhibit different sensitivities in consumption spending with respect to income changes?
Why do the young save?
Is a ta
73-240 Fall 2015
73-240 Lecture 18: Review Midterm 2
1
Format of Midterm 2
10 Short-Answer Questions (6 points each)
Should not take you more than 4 minutes to complete each question
3 Long-Answer Problems (one 10 point question, two 15 point questions
MACROECONOMICS
73-240
Lecture 9
Shu Lin Wee
This version: October 12, 2015
Plan for this Lecture
1
Finish up Search Model of Unemployment
2
Growth: Facts from the Long-Run
3
Growth: Overview of the Theory
What Happens to the Search Equilibrium when
exogen
MACROECONOMICS
73-240
Lecture 11
Shu Lin Wee
This version: October 21, 2015
Plan for This Lecture
1) Solow Growth Model
(a) Sources of Growth
Population
Technology
(b) Relationship between savings rates and output
(c) Optimal savings rate: Golden Rule
Sol
73-240 Fall 2015
73-240 Lecture 14: Solow Growth Model and Its Implications
1
Questions we want to ask
Imagine you are a consultant for a government and youve been asked to figure out how to
encourage sustainable growth in an economy. To figure out how to
MACROECONOMICS
73-240
Lecture 1
Shu Lin Wee
This version: August 31, 2015
Intermediate Macroeconomics
Preliminaries
What is expected
What to expect
The syllabus
Make sure to get and read the syllabus
Details about the course
The class: MW 1:30-2:50 / 3:00