Chapter 14: Public Debt
A look at the U.S. and U.K. debt ratios provides a historical perspective for
evaluating the government and deficits. Students should note that the debt to GDP
ratio tends to peak during wartime and recedes afterwa
Chapter 16: Money and Business Cycles II: Sticky
Prices and Nominal Wage Rates
The original Keynesian model of recession and unemployment was based on
sticky wages. This produced countercyclical movements in the real wage and
Consider an economy in which the marginal product of labor MPN is
MPN = 309 2N, where N is the amount of labor used. The amount of labor supplied,
NS, is given by NS = 22 + 12w + 2T, where w is the real wage a
Here are some macroeconomic data for the country of Qarth for the years 2010
Total Labor Force
12000 tons of corn
Public and Private Good
Government saving is defined as T (G + TR + INT), where G is government
purchases. Suppose, instead, that we decompose government purchases into government
consumption expenditures GCE and government investment
Chapter 1: Thinking About Macroeconomics
The chapter provides an overview of the important themes of the textbook.
It provides a brief description of the important economic aggregates in the
context of U.S . economic performance. Historic
Chapter 4: Working With The Solow Growth
Chapter 3 introduced the basic neoclassical model of economic growth
and its major results: growth rates tend to diminish over time as the economy
approaches a steady state level of output pe
Chapter 5: Conditional Convergence and LongRun Economic Growth
The previous chapters introduced a model of growth which was based on
the accumulation of capital per worker (capital deepening). The assumption of
diminishing marginal return
Chapter 15: Money and Business Cycles I: The
This is the first of two chapters which use the framework of the equilibrium
business cycle model to demonstrate how monetary shocks could create business
Chapter 17: World Markets in Goods and Credit
The analysis so far has been conducted under the assumption of a closed
economy. The final two chapters extend the model to include the flows of goods and
assets across national borders. This
Chapter 3: Economic Growth
The chapter discusses the importance of economic growth for raising living
standards over time and provides a basic framework for understanding the
sources of economic growth. Statistics are provided which a llo
Chapter 10: The Demand for Money and the Price
In the equilibrium theory of the business cycle explained in previous
chapters, money has played an important role. This contrasts with the demand
side theories of the business cycle in
Chapter 18: Exchange Rates
The open economy model is expanded to include different currencies. The
concept of purchasing power parity for tradable goods is defined, as are the concepts
of nominal and real exchange rates. The purchasing po
Chapter 2: National-Income Accounting: Gross
Domestic Product and the Price Level
The chapter introduces the system of National Income Accounts with
particular attention paid to the concept of GDP. The 3 conceptual approaches to
Chapter 9: Capital Utilization and Unemployment
This chapter provides a more realistic treatment of resource markets in relation to the
business cycle. The procyclical pattern of capacity utilization is explained in terms of a
Chapter 13: Taxes
This chapter focuses on the incentive effects of taxation on both demand
and supply side variables. It begins with a brief historical review of U.S. tax
revenue by source for both federal and local units of government .
Define the labor measure "civilian labor force.
Answer: the civilian labor force: the sum of those either working or looking for work.
Define what is meant by the uemployment rate and the participation rate.
Answer: unemployment rate, defined as the ratio
Homework 6 Solutions
Money demand is
If P = 100, Y = 1000, and i = 0.10, real money demand is
Nominal money demand is Md = 600P = 60000. In equilibrium, the money supply must
equal the demand for money. The velocity of money is
Alternatives and Choices
Question # 1 (What is meant by the term utility and how does it relate to
purposeful behavior? What is an opportunity cost? How does the idea relate
to the definition of econ
What Is Economics?
Question # From your own experience, in what way has the economy impacted you in
the last year?
Answer: The economy has impacted the amount of money that I earn at my current job.
ECONOMICS 4020 EXAM 3
1. EXPLAIN AND DIFFERENTIATE BETWEEN WHAT IS CALLED THE
PERMANENT INCOME THEORY OF CONSUMPTION AND THE LIFE
CYCLE THEORY OF CONSUMPTION.
THE PERMANENT INCOME THEORY EMPHASIZES THAT CONSUMERS LOOK
BEYOND CURRENT INCOME AS THEY M
EXAM 1 ECONOMICS 4020
Multiple Choice Questions: Choose the one alternative that best completes the
statement or answers the question and circle the letter of your choice. Each question
worth 2 points.
1) The three important macroeconomic variables
ECONOMICS 4020 EXAM 3
1. Explain and differentiate between what is called the permanent income
theory of consumption and the life cycle theory of consumption.
The permanent income theory emphasizes that consumers look beyond current
income as they m
1) a) define what is meant by the "natural rate of unemployment.
the natural rate of unemployment is the unemployment rate such
that the real wage chosen in the wage setting process is equal to
the real wage implied by the price setting process.