The ISLM Model
Economics 302
Wesleyan University
Professor: Bill Craighead
The ISLM model determines an equilibrium level of interest rates, r, and output (or income), Y . The IS curve represents equilibrium in the goods market, and the LM curve
represe
Macroeconomic Analysis (Econ 302)
Professor: Bill Craighead
Wesleyan University, Fall 2011
Course outline and reading list
Mankiw refers to N. Gregory Mankiw, Macroeconomics, 7h edition (Worth, 2009)
Easterly refers to William Easterly, TheElusiveQuestfor
Economics 302
Wesleyan University
Professor: Bill Craighead
Problem Set #2
Due Wednesday, Feb. 19, at the beginning of class. Write clearly and show your work.
Working in groups is permitted; seeking answers from students who have previously taken the
cla
Economics 302: Macroeconomic Analysis
Wesleyan University
Handout 14
28 November 2001
Assignment on Exchange Rates
Problem 1.
1(a) The LM curve does not shift under exible exchange rates. The interest
rate increases because of UIP. This is only possible i
1. Derive the meet and join for the following pairs of points:
A. A) x = 5, y = 3 (Answer: Meet = 3, join = 5)
B. x = (12, 5), y = (3, 9) (Answer: meet = (3, 5), join = (12, 9)
C. y =ax, a > 1 (Answer: for x < 0, meet = y, join = x; for x > 0, vice versa)
P 510@ LCIA
\v
G.
(0
c
a
MQ
Mk: ¥H
éorco
:"0
£57
Mamba) CLZ, 3? 1+
60 PMchan
\MQmmk (ii)
002% éwwk
C CNN .3 Uwgh 1M
[In UNEJ& W
C.
Fr.
\
an
é
W
:0 mi
$410
M90
FI'LC)
J10
$6660
(M)
(Q)
(31)
(omit;
(QuartWA 0 Gag) F L} 00
Cur. one? 3 60
Me}; In i 44:)
Economics 302
Wesleyan University
Professor: Bill Craighead
Problem Set #1
Due Tuesday, September 20, at the beginning of class. Write clearly and show your work.
Working in groups is permitted; seeking answers from students who have previously
taken the
Economics 302
Wesleyan University
Professor: Bill Craighead
Problem Set #3
Due Tuesday, October 4, at the beginning of class. Write clearly and show your work.
Working in groups is permitted; seeking answers from students who have previously
taken the cou
A Mathematical Primer for Intermediate Macroeconomics
Economics 302
Wesleyan University
Professor: Bill Craighead
This note provides an overview of some mathematical tools used in intermediate macroeconomics.1
Growth Rates
In macroeconomics we are frequen
Practice exam 3
0. Redo the 2nd practice exam and the 2nd exam as needed.
1. Ashlees preferences over bundles of goods x and y are summarized by the twice
continuously differentiable, strictly quasiconcave utility function U =u ( x, y ) . She has
income
X
1. A utility function U =u ( x), x n is said to be concave if for all x, x X and scalars
+
t ( 0,1) , f (tx +(1  t ) x) tf ( x ) +(1  t ) f ( x) . The function is said to be strictly concave if this
X
inequality is strict. In contrast, a utility funct
Economics 302
Problem Set 3 Solutions
Spring 2004
Problem 1
(1) Since the real wage is just 1, so the worker should not sell 2 black cards.
(2) Given that the real wage is 4, the worker should sell all his/her labor units.
(3)(4)
Labor supply
Labor demand
Economics 302 Problem Set 2
Suggested Solutions
1.
Acquire the data file from the web site. This file contains space delimited data series in this order:
time (t), output (Y), capital (K), and labor (N). You can use either Eviews or Excel for your
analysi
Economics 302: Macroeconomic Analysis
Wesleyan University
Handout 10
April 25 2004
Answers to Expectations Assignment
Problem 1. Note that banks compete for loans to rm A. Since banks can
borrow from the central bank at a rate of 3 percent this implies th
Economics 302: Macroeconomic Analysis
Wesleyan University
Handout 2
January 28, 2004
Assignment on GDP and GPI  Suggested
Answers
Note: Your answers can be dierent depending on the assumptions you made.
Problem 1.
1(a) The only nal good in Nirvanas econo
Solutions to Problem Set 4
1.
a. False : an increase in G shifts the IS to the right, Y and i, so C because income
has increased, but the effect on I is ambiguous.
b. Uncertain : Y but the interest rate could go up or down depending on the entity of
the s
Problem Set 5 Answers
1
True or false, explain
1. False. It is true for gross exports, since a real devaluation makes
domestic goods cheaper and hence increases the demand for them.
For net exports it is only true if the MarshallLerner conditions
are met
Economics 302: Macroeconomic Analysis
Wesleyan University
Handout 4
February 9, 2004
Introduction to Growth Accounting
Suggested Answers
Labor Productivity
Labor productivity is dened as the output per unit of labor input. Usually
average (not marginal pr
Economics 302
Wesleyan University
Professor: Bill Craighead
Problem Set #2
Due Tuesday, Sept. 27, at the beginning of class. Write clearly and show your work.
Working in groups is permitted; seeking answers from students who have previously taken the
clas
Macro Home Notes: Ch.19/3/13

Macroeconomics: studies the forces that influence the economy as a whole
What Macroeconomists Study
 Job of explaining the workings of the economy as a whole
 Data on incomes, prices, unemployment, etc
 Cannot conduct con