Economics 321: Public Economics
Prof. Marika Cabral
TA: Randeep Kaur, Jeff Denning
Spring 2014
UT Austin
Problem Set 2 Solution
1. (based on Ch.4 Question 5) From 1962 to 1965, nominal federal spendin
Economics 321: Public Economics
Prof. Marika Cabral
TA: Randeep Kaur
Spring 2014
UT Austin
Problem Set 1 Solutions
(due Mon January 27)
Maximum Score: 90 points
1. One rationale for imposing taxes on
Economics 321: Public Economics
Prof. Marika Cabral
TA: Jeff Denning, Randeep Kaur
Spring 2014
UT Austin
Problem Set 3
(due Mon Feb 24)
1. [Ch. 6] Why does Chay and Greenstones (2003) approach to meas
Solutions to ISLM Practice Problems
1)
Reproduce the following comparative static results:
Effect of an increase in
on
Y
r
C
I
G
+
+
?

CS
+
+
+

SP
+
+
?
+
T



+
M
+

+
+
P

+


MT
+

+
+
Solutions to Consumption Theory Practice Problems
1 Go to http:/research.stlouisfed.org/fred2/ and find the graphs of two variables: percent changes
in real GDP (GDPC96) and percent changes in aggreg
Solutions to Investment Theory Practice Problems
1) Show graphically how an increase in the interest rate will affect the optimal capital stock and
hence investment.
The optimal capital stock is deter