Macroeconomic Models:
With the description of various interest rates and financial institutions as background, we
now turn to development of macroeconomic models that will provide us with the
theoretical basis to understand developments in the economy, in
Econ 111
Homework #1
Chee Yang Alexander Chuk
A11498065
1) The correlation coefficient of all the variables are above >0.8 which imply that the Federal
Fund Rate, U.S. government Securities/Treasury, and Corporate Bond/Moody's seasoned Baa
rate is positiv
Econ 111, Winter Quarter 2008 Midterm Answers 1. There were two versions of this question, one asking for the direct channels through which higher interest rates affect aggregate demand and the other asking for the channels through which lower rates
Econ 111, Winter Quarter 2008 Midterm Answers 1. There were two versions of this question, one asking for the direct channels through which higher interest rates affect aggregate demand and the other asking for the channels through which lower rates
Economics 111
Fall Quarter, 2015
Midterm #1: Answer Key
1. Students are to answer either part (a) or part (b). Here are several acceptable answers.
Part a. Run-up to postwar bank-centered financial crises.
i. real housing prices rise a lot prior to the on
Transaction of loan
Always have 2 parties
Collateral
Riskiness (info. Asymmetry)
Personal Lending
-checking account
-certificate of deposit
Pre-Crisis
Asset $ rise (house/stock)
Net export worsen
GDP growth slow down
Leverage grows
Subprime Loan
Alt-A loa
1. How does a reduction in real interest rates by the Federal Reserve affect the various components of aggregate demand? Your answer should focus on a discussion
of the traditional channels of influence of lower real interest rates on aggregate demand. Af
Economics 111, Midterm #2, Winter Quarter 2014
Q1. Here is a discussion of the traditional channels of influence of lower real interest rates (r).
(i)
(ii)
(iii)
(iv)
A decline in r lowers the real cost of borrowing. This increases the demand for consumer
Economics 111
Homework Assignment #1:
Your first task will be to download four interest rate data series from the Federal Reserve
Board website into EXCEL. IF YOU ARE UNFAMILIAR WITH EXCEL, YOU
SHOULD IMMEDIATELY TALK TO ONE OF THE TAs-THE TAs HAVE LEAD
R
Current Real Consumption: Real current/project post-tax income
- Consumption smoothing is approx. optimal
- Consumption in every period of life depends on individual expected life resource
- MPC, out of temporary income = MPC, to permanent income = 1
- Im
Economics 111
Homework Assignment #1:
Your first task will be to download four interest rate data series from the Federal Reserve
Board website into Excel. You can plot the data on the Fed website (really easy) or plot
it in EXCEL (a little bit harder). Y
Economics 111, Midterm #2
Fall Quarter 2014
There are 90 points possible on this exam. In answering the following questions, feel
free to use any abbreviations or curve-shifting symbols used in class. Also be sure to
label the curves and the axes carefull
xxxx
ECON 111
Professor Darrel Cohen
October 3, 2015
Homework #1
1.
During the period from September 1955 to August 2015:
The correlation between the federal funds rate and the 1-year Treasury rate is 0.978397.
The correlation between the federal funds ra
Economics 111
Homework #3
You will need a pocket calculator (or the equivalent) to help answer these questions.
1. If the future value of a payment to you at the end of one year is $104 and the market
interest rate (i.e., the discount rate) is 4% per annu