ECMB06 Assignment 2 Answer Key Winter 2010
Question 1 (15 points) SOE with Flexible erate in SR (Ch12)
A)
Target Y
(i.e. use monetary policy to set Y = YT, this defines a
specific LM curve GIVEN r*)
Increase in Autonomous Investment
The increase in auton
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 3: National Income: Where It Comes From and Where It Goes
Overview of the Chapter
The chapter develops a basic model that attempts to explain the longrun behavior of
a wellfunctioning economy (prices are flexible and all markers clear). The clas
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 4: Money and Inflation
Overview of the Chapter
This chapter examines the classical theory of money.
It attempts to explain the causes, effects, and social costs of inflation.
Once again, we are studying the behavior of price and inflation in the l
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 5: The Open Economy
Overview of the Chapter
Study openeconomy macroeconomics.
Relationship between the flows of goods and services (NX) and the flows of capital (NFI).
Two exchange rates: nominal exchange rate (e) and real exchange rate ().
Devel
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 6: Unemployment
Overview of the Chapter
To show that unemployment is the natural consequence of dynamics in the labour
market.
Both job finding and job separation rates determine the NRU.
To discuss how the process of job search leads to frictiona
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 7: Economic Growth I: Capital Accumulation and Population Growth
Overview of the Chapter
Chapters 7 & 8 study the Solow growth model, and use it to explain growth facts.
The Solow model shows that an economys output level and growth rate of output
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 8: Economic Growth II: Technology, Empirics, and Policy (Section 81,
Appendix)
Overview of the Chapter
Introduce technological progress in the Solow model (Section 81).
Growth accounting (Appendix).
81 Technological Progress in the Solow Model
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 9: Introduction to Economic Fluctuations (Sections 93 & 94)
Overview of the Chapter
Chapters 10 and 11 develop a general ISLM model of aggregate demand and use the
ISLM model to derive the AD curve.
In this chapter, we will first derive both s
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Time Horizons in Macroeconomics
Very long run: Flexible prices, full employment of K and L (variable A, K and L).
Time frame: several decades.
Use growth models to explain economic growth.
Long run: Flexible prices, full employment of K and L ().
Time
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 11: Aggregate Demand II: Applying the ISLM Model (Sections 112 & 112)
Overview of the Chapter
In this chapter, we examine how various shocks originates form the goods and money
markets may affect Y and r, both graphically and algebraically.
The
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
ECMB06 Macroeconomic Theory and Policy: A
Mathematical Approach
What is Macroeconomics?
Macroeconomics is the study of the economy as a whole.
Organization of the Course:
1) Introduction
Chapter 2: Measurements of macroeconomic data GDP, inflation rate,
NAME
STUDENT #
UNIVERSITY OF TORONTO AT SCARBOROUGH
ECM B06
MACROECONOMICS
Jack Parkinson
Spring 2009
MIDTERM EXAMINATION: SOLUTIONS VERSION #1
Note: Ver #1 has the word INSTRUCTIONS here!
INSTRUCTIONS:
1. Total time for this test is 1.5 hours.
2. Total m
ECMB06 Assignment 1  SOLUTIONS
Question 1 (20 points; 4, 4, 4, 4, & 4 respectively) Chapter 2 & 3
A)
B)
Year 1 is the base year so nominal = real (for this year)
Nominal GDP (Y = C + I + G + NX)
Y = $ 10,689,700,000 (2 points)
The most crucial figure on
NAME
STUDENT #
UNIVERSITY OF TORONTO AT SCARBOROUGH
ECM B06
MACROECONOMICS
Jack Parkinson
Spring 2009
MIDTERM EXAMINATION: SOLUTIONS VERSION #2
Note: Ver #2 has the underlined word INSTRUCTIONS here!
INSTRUCTIONS:
1. Total time for this test is 1.5 hours.
ECMB06 LEC 01, 02, 03 & 04
Macroeconomic Theory and Policy
Assignment 1
Due: On or before Friday, February 6, 2009, Lecture (No Later than 12:30pm)
(Note: Assignments submitted after 12:30pm on February 6 th WILL NOT BE
accepted under ANY circumstance.)
I
ECMB06 Assignment 1 Answer Key Winter 2010
Question 1 (35 points)
Part (a) (5 points) 1 point for base year & 2 points each for other years
2007
2008
2009
Nominal GDP
$ 1,955,600,000
$ 2,384,860,000
$ 2,620,700,000
Real GDP
$ 1,955,600,000
$ 2,159,530,000
ECMB06 All lectures
Macroeconomic Theory and Policy: A Mathematical Approach
Assignment 1
Due: (On or before) Friday, February 12, 2010, 11:30 am
Room:
MW 380 (Professor Parkinsons office)
Note: Assignments submitted after 11:30 am on Feb 12th WILL NOT BE
Macroeconomic Theory and Policy: A Mathematical Approach
ECM B06

Fall 2012
Chapter 12: Aggregate Demand in the Open Economy (Sections 121 123)
Overview
Shortrun analysis for a small open economy (SOE).
Develop the MundellFleming model an open economy version of the ISLM model.
Use the MundellFleming model to analyze what w