Econ 451.2
Spring 2014
Homework 2
(Due Feb. 11)
Instructions:
You need to use the concepts and theories we discussed in class to answer the
questions.
Use bullet-point style to outline your argument
Econ 451.2
Spring 2014
Homework 1 Answer Key
1. (12 pts) What is the adverse selection problem in health insurance? Can this help to
explain why so many people are uninsured? Explain.
Answer. There is
Econ 451.2
Spring 2014
Homework 3
(Due Mar. 4)
1. A country is always worse off when its currency is weak (fall in value). Is this
statement true, false, or uncertain? Explain your answer.
2. If the B
Professor Ruilin Zhou
Fall 2014
Homework 1
1. Suppose you go to a bank, intending to buy a one-year certificate of deposit that pays an
annual interest rate of 2% with your savings. At the bank, you r
Econ 451.2
Spring 2014
Homework 4 Answer Key
1. (6 pts) If a bank depositor withdraws $1000 of currency from his checking account, what
happens to reserves, checkable deposits, and the monetary base?
Econ 451.2
Spring 2014
Homework 2 Answer Key
1. (12 pts) What is a credit spread? Why do credit spreads rise significantly during a
financial crisis?
Answer.
A credit spread is the difference between
Econ 451.2
Spring 2014
Homework 3 Answer Key
1. (10 pts) A country is always worse off when its currency is weak (fall in value). Is this
statement true, false, or uncertain? Explain your answer.
Answ
Chapter 6. A pure-currency model with
pairwise meetings
Neil Wallace
July 11, 2017
1
Introduction
We start with a model that we will build on throughout this part. The rst
version we describe is too s
Symmetric Information and Competitive
Equilibrium
Neil Wallace
June 20, 2017
1
Introduction
We are all familiar with the general idea of uncertainty. We are uncertain
about tomorrows weather, about wh
Chapter 7. Coexistence of money and higher
return assets
Neil Wallace
July 12, 2017
So far we have studied models of money in which the use of money is
the only way to accomplish trade there are no ot
Exercises in Chapter 2
Exercise 15 (ii). There would be two CE pricesone for each market. Equations (3), (4) and (5) would have to be rewritten to include some index for
the odd-numbered and even-numb
Econ 451.2
Spring 2014
Homework 1
(Due Jan. 30)
Instructions:
You need to use the concepts and theories we discussed in class to answer the
questions.
Use bullet-point style to outline your argument
Chapter 2. Competitive equilibrium:
certainty
June 20, 2017
1
Introduction
One of the biggest ideas in economics is Adam Smiths invisible-hand notion:
under some conditions, if each person pursues her
Chapter 5. Lucass Signal Extraction Model
Neil Wallace
June 23, 2017
1
Introduction
Here I present a simplied version, based on [3], of the model for which R.E.
Lucas, Jr. was awarded the Nobel Prize
Chapter 4. Money in the
alternating-endowment model
Neil Wallace
June 23, 2017
1
Introduction
Here we study versions of the intertemporal environment that we earlier
studied as part of the study of CE
Exercises in Chapter 4
1. The first equation in (33) is now
2 cL = 1 ,
1+
2 cH
from which it follows that
2
1+
H
c =
cL
Replacing cH with the right-hand side of the above equality in the second
equati
Exercises in Chapter 4
Exercise 1. No. Suppose towards a contradiction that there is an equilibrium with
vt > 0 for some date t. Let T denote the largest1 t such that vt > 0. Money
is owned by someone
Chapter 6
Exercise 8. In other words, we are being asked to show that the optimal value in
Problem 1 is larger than the optimal value in Problem 2. I will show this in
steps. First, Ill argue that if
Exam 1-econ 451-section 2-fall 2017ANSWERS
Directions. There are 5 questions and the maximum score on the exam is
100. The points assigned to each part appear in parentheses. Please answer
all the que
Exercises in Chapter 4
Exercise 8. First, well argue that the allocation in the proposition is feasible.
Clearly mnt is non-negative for all n and t. Moreover, since s (1) denotes
Crusoes saving, we h
Exercises in Chapter 2
Exercise 23. By Claim 21 in Chapter 2, the indifference curve through the
point (cn1 , cn2 ) = (x, x) has slope
1
u0 (x)
0 =
u (x)
Exercise 24. To show that there is a CE with
Chapter 1: Introduction
Neil Wallace
June 29, 2017
Our goal is to study money and some government policies related to
money. In order to do that we construct models and use them as our laboratories fo
ECON 451: Monetary Theory and Policy
Penn State: Fall, 2016
Logistics
Lecture: 075 Willard Building
Tuesdays and Thursdays, 1:35-2:50
Instructor: Ross Doppelt
Oce: 617 Kern Building
E-mail: [email protected]
ECON 451 Spring 2014
Homework 6 Answer Key
1. Classify each of the following as a supply or demand shock, assuming the economy is at
a long-run equilibrium before the shock. Use a graph to show the ef
Econ 451.2
Spring 2014
Midterm Exam 1 Answer Key
1. (8pts) What is financial intermediation?
Answer. Financial intermediation is a process of transform claims with one set of
characteristics (e.g. ter
Econ 451.2
Spring 2014
Midterm Exam 2 Answer Key
1. (6pts) Suppose that an economy has an average GDP growth rate of 3%, an average
inflation rate 2%, and velocity is decreasing at a rate of 0.5%. Wha
ECON 451
Spring 2014
Homework 5 Answer Key
1. (6pts) During and in the aftermath of the nancial crisis of 200709, investment fell substantially, despite signicant decreases in the real interest rate.
Econ 451
Fall 2014
Homework 1 Answer Key
1. (10 pts) Suppose you go to a bank, intending to buy a one-year certificate of deposit
that pays an annual interest rate of 2% with your savings. At the bank
Econ 451
Fall 2014
Homework 2 Answer Key
1. (12 pts) What is deleveraging? Give two different reasons that would cause a bank to
deleverage.
Answer.
Deleveraging is a process that financial institutio