Question EC 202- Macroeconomics SNHU 15EW3 Problem Set Homework Assignment #3

04 Jun Question EC 202- Macroeconomics SNHU 15EW3 Problem Set Homework Assignment #3

Question
EC 202- Macroeconomics

SNHU 15EW3

Problem Set Homework Assignment #3

Instructions: Please answer ALLof the Questions from 1 to 12 Below. For questions requiring computations, please show your work completely to get full credit. You may work alone or in groups. If you work in groups, please state the name(s) of your classmate. You must submit your paper individually. No “group” paper accepted. You may send your completed answers electronically or bring them to class. This assignment is due at start of class on 2/19. Good Luck!

1. Consider five individuals with different occupations. (1 Point)

Mary

provides legal advice

wants knives sharpened

Clark

grows tomatoes

wants legal advice

Nathan

styles hair

wants tomatoes

Polly

brews beer

wants knives sharpened

Paul

sharpens knives

wants beer

Which of the following pairs of individuals has a double coincidence of wants?

a. Mary and Clark

b. Clark and Nathan

c. Nathan and Polly

d. Polly and Paul

2.What makes the New York Federal Reserve regional bank so important? (3 Points)

3.Draw a simple T-account for First National Bank which has $5,000 of deposits, a required reserve ratio of 10 percent, and excess reserves of $300. Make sure you balance sheet balances. (2 Points)

4.If the Fed were to unexpectedly increase the money supply, creditors would gain at the expense of debtors. (True or False) (1 Point)

5.Using separate graphs, demonstrate what happens to the money supply, money demand, the value of money, and the price level if:

a. the Fed increases the money supply. (2 Points

b. people decide to demand less money at each value of money. (2 Points)

6.In the open-economy macroeconomic model, the supply of loanable funds equals (1 Point)

a. national saving. The demand for loanable funds comes from domestic investment + net capital outflow.

b. national saving. The demand for loanable funds comes only from domestic investment.

c. private saving. The demand for loanable funds comes from domestic investment + net capital outflow.

d. private saving. The demand for loanable funds comes only from domestic investment.

7.How are the identities S = NCO + I and NCO = NX related to the foreign currency exchange market and the loanable funds market? (2 Points)

8.In an open economy, gross domestic product equals $2,450 billion, consumption expenditure equals $1,390 billion, government expenditure equals $325 billion, investment equals $510 and net capital outflow equals $225 billion. What is national saving? (2 Points)

9.Why do higher real interest rates lead to lower net capital outflow? (1 Point)

10.Recession come at (hint: for part 2, which decline in spending is larger) (1 Point)

a. regular intervals. During recessions consumption spending falls relatively more than investment spending.

b. regular intervals. During recessions investment spending falls relatively more than consumption spending.

c. irregular intervals. During recessions consumption spending falls relatively more than investment spending.

d. irregular intervals. During recessions investment spending falls relatively more than consumption spending.

11. The explanations for the slopes of the aggregate demand and short-run aggregate supply curves are the same as the explanations for the slopes of demand and supply curves for specific goods and services. (True or False) (1 Point)

12.When looking at a graph of aggregate demand, which of the following is correct? (1 Point)

a. There are nominal variables on both the vertical and the horizontal axes.

b. There are real variables on both the vertical and horizontal axes.

c. The variable on the vertical axis is nominal; the variable on the horizontal axis is real