Problem Set #4: Financial Markets Moneta Polic Mone Market and Loanahle Funds
1. Decreasing which of the following is a task of the nancial system?
i. Transaction costs
a. i only
r ii only
d. i and ii only
Purpose: To understand the natural barriers to economic growth via the business cycle
Warm up: What does it mean when the real GDP increases? Decreases? What happens if
the real GDP decreases for an extended period oftime?
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9. Which of the following would be counted
as Investment when calculating GDP?
1. The purchase of a computer by an
II. The purchase of a share of IBM
111. The construction of a new house.
a. I only.
b. 11 only.
c. land II only.
Purpose: Determine the impact of price change on an economy and how they can be measured
Warm up: What does ination mean to us?
:- Non-economic ideas?
0 Economic ideas?
0 Is it good or bad?
Inflation denition: a rise in the over
Purpose: Dene and understand how unemployment ts into the larger economy as a
measurement of changes in the economy.
Warm up: What do you think being unemployed is? Write it down. Discuss with a neighbor and
decide who has the better definiti
1. Nation A needs 8 acres of land to produce
500 bushels of corn and 2 acres ofland to
produce 500 bushels of rice. Meanwhile,
nation B needs 6 acres to produce 500
bushels of corn and 3 acres of land to
produce 500 bushels or rice.