ECON 212 Intermediate Macroeconomics
TR 11:30 am - 12:45 pm
White Hall 205
Tuesday 1:00 2:00 pm and Wednesday 3:00-5:00 pm at Rich Bldg. 322B
March 28, 2014
1. A movement along an aggregate demand curve corresponds to a change in
income in the IS-LM model _, while a shift in an aggregate demand
curve corresponds to a change in income in the IS-LM model _.
resulting from a change in m
April 28, 2014
1. In a small open economy, if the world interest rate falls, then domestic investment
will _ and the real exchange rate will _, holding all else constant.
A) decrease; decrease
B) decrease; increase
C) increase; decrease
March 5, 2014
1. Over the business cycle, investment spending _
is inversely correlated with
is more volatile than
has about the same volatility as
is less volatile than
2. Measures of average workweeks and of sup
April 04, 2014
1. In the case of demand-pull inflation, other things being equal:
both the inflation rate and the unemployment
rate rise at the same time.
the unemployment rate rises but the inflation
the inflation rate rises but
1. If a change in government regulations allows banks to start paying interest on
checking accounts, this will:
A) increase the demand for money.
B) decrease the demand for money.
C) have no effect on the demand for money.
D) increase the
Problem Set 5
SECTION A: MULTIPLE CHOICE QUESTIONS
Use the following to answer question 10:
Exhibit: ADAS Shifts
1. (Exhibit: ADAS Shifts) Starting from long-run equilibrium at A with output equal to
Y and the price level equal to P1, if there is an unexp
Steady State and Golden Rule of Saving in
@K.R.Bhattarai, Business School, University of Hull, UK.
Solow Growth Model
Production function with capital and labour as its inputs:
(Close Economy without Government)
Gross Domestic Product (GDP):
Product, Expenditure and Income
! Total expenditure on domestically-produced
final goods and services.
! Total income earned by domestically-located
factors of production.
Total aggregate output is ultimately sold.
Short Answer Sasle — 763+ 3
17. According to the imperfect-information model, when the price level rises by the
amount the producer expected it to rise, the producer:
A) increases production.
B) does not change production.
C) decreases production.
"5mm: 01- In an eonmmic model:
erogenous variables and mdngemm variables are both xed when me; enter the model.
a 3 endogenous variables affect endogenous variables.
WIDE variables and mm variables are both determined wirin lire Inn-Ciel.
(aka CONSUMPTION-LEISURE FRAMEWORK)
The Road Ahead
THE THREE MACRO (AGGREGATE) MARKETS
Will put micro-foundations under
INFLATION AND INTEREST RATES
IN THE CONSUMPTION-SAVINGS
Nominal interest rate measured in dollars
Real interest rate measured in goods
Fisher equation: a link between the nominal interest rate,
FIRMS IN THE
Embed firms in two-period (multi-period) economy
In each period t, representative firm produces according to a
production technology Atf(kt, nt)
nt: labor used for production
kt: capital (mac
THE MACROECONOMICS OF TIME
Consumption-leisure model a static (i.e., one time period) model
Dynamic frameworks the core of modern macroeconomic analysis
Explicit consideration of how economic decisions/
Income and substitution effects
Example 1: An increase in the price
of good X
Income = $60, Py = $1.50, Px = $1.00
Consumer chooses her optimal bundle
Income Expansion Path
How can we explain the extraordinary gains
in output per capita in most countries over the
the past century or so?
And why havent all countries
reaped the same gains?
Why growth matters
! Anything that effects the long-run rate of economic
growth even by
U.S. inflation and its trend,
% change from 12 mos. earlier
% change in
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010
! definition: the number of times the average
dollar bill changes hands in
The Myth of Asias Miracle
Foreign Affairs; Nov/Dec 1994; Vol.73, Iss. 6; pg. 62, 17 pgs
The Myth of Asias Miracle
A CAUTIONARY FABLE
Once upon a time, Western opinion leaders found themselves both impressed and frightened by the