Intermediate macro problem set | Economics homework help

SECTION 1: MULTIPLE CHOICE QUESTIONS

1. Primarily based in your understanding of the mix expenditure model, everyone knows with certainty that an equal and simultaneous enhance in G and T will set off:

(a) an increase in output
(b) no change in output
(c) a reduction in output
(d) an increase in funding (e) a decrease in funding

For the subsequent two questions, suppose an monetary system produces solely milk and butter. As- sume that every one manufacturing is consumed in yearly, and that value and quantity data are given throughout the tables beneath.

12 months 1
Good Quantity Worth

Milk 500 $2 Butter 2000 $1

12 months 2
Good Quantity Worth

Milk 900 $three Butter 3000 $2

2. (Focus on with the above tables) Between 12 months 1 and 12 months 2, precise GDP (primarily based totally on 12 months 1 as a base yr) grew by

(a) 58.18% (b) 158.18% (c) 160% (d) 60%

(e) 260%

three. (Focus on with the above tables) Between 12 months 1 and 12 months 2, the GDP deflator (primarily based totally on 12 months 1 as a base yr) rose

(a) 81.25% (b) 90%
(c) 190% (d) 83.33 (e) 183.33%

ECON 301: Intermediate Macro Draw back Set #1 1

1. Whichofthefollowinggenerallyoccurswhenacentralbankpursuesexpansionarymonetary protection?
   (a) the central monetary establishment purchases bonds and the speed of curiosity will enhance (b) the central monetary establishment purchases bonds and the speed of curiosity decreases (c) the central monetary establishment sells bonds and the speed of curiosity will enhance
   (d) the central monetary establishment sells bonds and the speed of curiosity decreases
   (e) an increase throughout the reserve requirement ratio
2. The marginal propensity to devour represents
   (a) the extent of consumption that occurs if disposable income is zero.
   (b) the ratio of full consumption to disposable income.
   (c) full income minus full taxes.
   (d) the change in output introduced on by a one-unit change in autonomous demand.
   (e) the change in consumption introduced on by a one-unit change in disposable income.
3. Suppose a one-year low price bond presents to pay $1000 in a single yr and presently has a 15% fee of curiosity. Given this information, everyone knows that the bond’s value need to be roughly:
   (a) $870 (b) $1150 (c) $850 (d) $950 (e) $985
4. Equilibrium throughout the gadgets market requires that
   (a) manufacturing equals income.
   (b) manufacturing equals demand.
   (c) consumption equals saving.
   (d) consumption equals income.
   (e) authorities spending equals taxes minus transfers.
5. The LM curve shifts down when which of the subsequent occurs?
   (a) an increase in taxes
   (b) an increase in output
   (c) an open market purchase of bonds by the central monetary establishment (d) a decrease throughout the nominal money stock
   (e) an increase throughout the value stage

ECON 301: Intermediate Macro Draw back Set #1 2

1. Suppose there’s a rise in shopper confidence. Which of the subsequent represents your entire guidelines of variables that ought to enhance throughout the temporary run in response to this enhance in shopper confidence?
   (a) consumption
   (b) consumption and funding
   (c) consumption, funding and output
   (d) consumption and output
   (e) consumption, output and the speed of curiosity
2. In a given yr, suppose a corporation spends $100 million on intermediate gadgets and $200 million on wages, with no totally different payments. Moreover assume that its full product sales are $800 million. The price added by this agency equals:
   (a) $200 million (b) $300 million (c) $500 million (d) $700 million (e) $800 million

ECON 301: Intermediate Macro Draw back Set #1 three

SECTION 2: FREE RESPONSE QUESTIONS

1. Ponder an monetary system with a corn producer, some customers, and a authorities. In a given yr, the corn producer grows 30 million bushels of corn and the market value for corn is $5 per bushel. Of the 30 million bushels produced, 20 million bushels are provided to customers, 5 million are saved in inventory, and 5 million are provided to the federal authorities to feed the army. The corn producer pays $60 million in wages to customers and $10 million in taxes to the federal authorities. Prospects pay $5 million in taxes to the federal authorities, and procure $5 million in Social Security funds from the federal authorities. The revenue of the corn producer are distributed to customers. Calculate private disposable income, private sector saving, authorities saving, (nationwide) saving, and the federal authorities deficit.
2. Assume an monetary system with a coal producer, a steel producer, and some customers (there is not a authorities). In a given yr, the coal producer produces 15 million tons of coal and sells it for $5 per ton. The coal producer pays $50 million in wages to customers. The steel producer makes use of 25 million tons of coal as an enter into steel manufacturing, all purchased at $5 per ton. Of this, 15 million tons of coal comes from the house coal producer and 10 million tons is imported. The steel producer produces 10 million tons of steel and sells it for $20 per ton. House customers buy eight million tons of steel, and a few million tons are exported. The steel producer pays customers $40 million in wages. All revenue made by dwelling producers are distributed to dwelling customers.
   Current the small print of the calculations that resolve GDP using the
   (a) product (value-added) technique,
   (b) expenditure (value of final gadgets) technique, (c) and income technique.

three. Ponder the subsequent monetary system.

Y=Z Z=C+I+G C = c0 + c1YDYD = Y − T

T = t0 + t1Y I = b0
G = g0

the place Y is output, Z is mixture demand, C is consumption, I is funding, G is gov- ernment spending, YD is disposable income, T is a tax carry out, t0 is a lump-sum tax, t1is a proportional tax on income, and I is funding. The parameter values are c0 = 1000,c1 =zero.75,t0 =−600,t1 =zero.2,b0 =800,andg0 =1200.

(a) Clear up for an expression for equilibrium Y (i.e., sustaining all algebraic symbols), then calculate equilibrium Y using the expression and the parameter values.

ECON 301: Intermediate Macro Draw back Set #1 4

1. (b)  Graph the mix expenditure/gadgets market model. Be sure to level out the numeri- cal values of the intercept and slope of the demand curve along with the well worth the place the demand curve crosses the 45 diploma line. Why is the slope completely totally different than the marginal propensity to devour out of income?
2. (c)  What is the expression for the federal authorities spending multiplier? What is the expres- sion for the lump-sum tax multiplier? What are the values of these multipliers? Why does a reduction in lump-sum taxes have a particular measurement multiplier than an increase in authorities spending?
3. (d)  Suppose G = g1 = 1500 throughout the following yr, nevertheless each half else stays the an identical. What’s subsequent yr’s equilibrium Y ? Title this equilibrium Y1, and the outdated equilibriumY0. What is the p.c change in equilibrium output year-over-year? Draw the model new demand curve on the an identical decide as merchandise (b) and level out the associated values. Level out with an arrow the route the demand curve shifts.
4. Suppose that money demand is given by
   Md =$Y(.25−i)
   the place $Y is $100. Moreover suppose that the availability of money is $20.
   1. (a)  What is the equilibrium fee of curiosity?
   2. (b)  If the Federal Reserve wants to increase i by 10 proportion elements (e.g., from 2% to 12%), at what stage must it set the availability of money?
5. Current the changes on temporary run equilibrium precise GDP and the equilibrium nominal fee of curiosity throughout the IS-LM model from each of the subsequent insurance coverage insurance policies/monetary situations. Briefly make clear any monetary reactions (i.e. what is going on throughout the gadgets and/or money markets. One graph is important for each half. Clearly label your graph for full credit score rating.
   (a) A decrease in taxes
   (b) An increase throughout the money present (c) A decrease in shopper confidence