1
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set VI Solution
Problem 1 (10 points)
a) Assume the following numbers are given to us: current price level, Pt=1 and future price level
Pt+1=1.2. Calculate the inflation rate t.
Solution(3 points):
Week 5 Answer Key
Econ 210D
K.D. Hoover
Spring 2015
Week 5 Answer Key
Problem 7.1:
a) Clorox and P&G are users of funds and the Public is the source of funds in both markets.
When Clorox buy back some of its bonds, fewer bonds are available at each intere
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set II Solutions (100 pts)
Problem 1 (26 pts)
The production function for a closed economy can be expressed by Y = 3L0.75 and the utility function is
defined by U = H2/3 C1/3, where H stands for leis
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set IV
September 23, 2014
Problem 1 (12 pts)
Use the AS-AD graph to answer the following:
a) Suppose that suddenly everyone in the economy becomes less patient; they now value current
consumption mor
Duke
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Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set VIII Solutions
Problem 1 The Small Open Economy in the Neoclassical Model (35 points)
Suppose we are in a small open economy which is currently experiencing a balanced current account
(CA). Assum
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set IX
Problem 1 Exchange Rates, and Purchasing Power Parity (23 points)
a. Express the real exchange rate in terms of the terms of trade.
Solution (6 pts): The real exchange rate corresponds to the
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set X Solutions
Problem 1 Government Consumption and Public Services
a. Consider a temporary increase in government spending financed by lump sum taxes. Assume
that government spending does not contr
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set VII Solutions
Problem 1 Investment and the Real Interest Rate (18 points)
a. Explain how investment is determined by the real interest rate.
Solution(10 pts): Investment depends positively on the
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set V Solutions
September 30, 2014
Problem 1 The Intuition Behind the Basic Market Clearing Model (12 pts)
a) Explain how the aggregate supply is determined by the real interest rate. What other
dete
Economics 210
Prof. Michelle Connolly
Fall 2014
Problem Set III Solutions
Problem 1 (16 pts)
Suppose you only live two periods and there is a credit market in place, allowing you to buy or
sell bonds between both periods. At the start of your analysis, be
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In signing the following, I am pledging to uphold the Duke University honor code.
Signature: _
Name:
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Duke University
Department of Economics
Professor Michelle Connolly
2016
Econ 210D: Intermediate Macroeconomics
Midterm
Make sure to use a different exa
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Callan Corcoran
Econ 210 PS 5
1.
a. Aggregate supply is equal to labor, which is positively proportional to
the real interest rate. As interest rate increases, laborand by
extension, aggregate supplyincreases as well. Other determinants
that shift the agg
Adding Shading for NBER Recession Dates for Graphs.
The Excel hints for adding shading for NBER recession dates to graphs are for earlier versions of
Excel than many students have. The main idea of how to do it, remains the same. However, the
details diff
Callan Corcoran
Econ 210 PS 10
1.
a.
i. Labor supply increases by a very small amount, as the lump sum tax
manifests itself as a temporary negative wealth effect (causing leisure
to decrease), the shock of which is smoothed over time (and is thus
very sma
Callan Corcoran
Econ 210 PS 4
1.
a. In response to the general feelings of impatience, aggregate demand
increases, prompting an increase in equilibrium interest rate. This
makes intuitive sense, as the aggregate demand in every period
(which will at some
Callan Corcoran
Econ 210 PS 9
1.
a. RER = e / TOT, where RER is the real exchange rate, e is the nominal
exchange rate, and TOT are the terms of trade (P / P*)
b. Absolute purchasing power parity (PPP) is a concept wherein the price of a
good must be the
Callan Corcoran
Econ 210 PS 8
1.
a.
I.
Aggregate supply decreases, as the shock decreases marginal productivity.
II. Investment demand remains unchanged, as temporary shocks do not prompt
investment changes (which will impact future periods, when the shoc
Callan Corcoran
Econ 210 PS 3
1.
a. No, the inheritance will not induce any form of intra- or inter-temporal
substitution effects. The addition of an inheritance is a pure wealth
effect, causing increased consumption of all goods positively
associated wit
Callan Corcoran
Econ 210 PS 1
1.
a. GDP = 15 * 5 * 1.2 $90
GNP = GDP + NFIFA $90
GDP and GNP are equal, as there is no net factor income from abroad.
b. NDP = GDP depreciation 90 5 $85
GNI = GDP + factor income from foreign residents domestic income
from
Eddie Merenda and Shane Kreidel
Problem Set 1
Problem 1:
a) Government
b) Investment
c) Net exports
d) Consumption
e) Investment
Problem 2:
a)
2010 nominal GDP: (200*$2)+(200*$3)=$1000
2010 real GDP: (200*$2)+(200*$3)=$1000
2010 GDP deflator: 100*(nominal
Week 2 Answer Key
Econ 210D
K.D. Hoover
Spring 2015
Week 2 Answer Key
Problem 2.2:
Table 1. New Zealand National Income and Product Accounts
1996
GDP
Consumption
Savings
Investment
Government
Spending on Goods
and Services
Exports
Imports
Government Budge