Macro
A country's government runs in a deficit when:
Government spending exceeds tax revenues
Represents the supply curve shifter in the market for loanable funds
What is national savings
A decrease in net exports in the United States would have what impact on the Capital & Financial Account?
Surplus
The transaction demand for money is very closely associated with money's use as a
Medium of exchange
Assume the economy of Jenland is in short-run equilibrium at a real output level above full-employment real output.
A. The banking system in Jenland has ample reserves. Identify a specific monetary policy action that the central bank of Jenland would implement to return the economy to full employment in the short run.
B. Draw a correctly labeled graph of the reserve market for Jenland, and show the effect of the central bank’s action identified in part A on the policy rate.
C. Based on the change in the interest rate shown on your graph in part B, will each of the following increase, decrease, or remain the same in Jenland in the short run?
i. The price of previously issued bonds ii. The price level. Explain.
What is the rate of return
The economy of Alpha is in short-run equilibrium with a cyclical unemployment rate of 3%, a frictional unemployment rate of 4%, and an actual unemployment rate of 8%.
(a) Calculate Alpha’s natural rate of unemployment. Show your work.
(b) Draw a correctly labeled graph of the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for Alpha, and show each of the following.
(i) The current equilibrium output and price level, labeled Y1 and PL1, respectively (ii) The full-employment output, labeled YF
What is Appreciation
Central planning is a central concept to this economic system
Command
The Fisher Equation
Nominal Interest Rates = Real Interest Rates + Expected Inflation
The table provided shows economic data for the country of Louland. The base year is year 1, and the GDP deflator in year 2 is 115.
Year 1: Nominal GDP 800,000. Population: 1,000
Year 2: Nominal GDP 1,035,000. Population: 1,200
(a) Calculate real GDP in Louland in year 2. Show your work.
(b) How would the change in real GDP from year 1 to year 2 affect the demand for money and the nominal interest rate in Louland?
(c) Did the standard of living of the average citizen in Louland increase, decrease, or remain the same from year 1 to year 2 ? Explain using numbers.
(d) What was the numerical value of the inflation rate from year 1 to year 2 ?
(e) If nominal wages increased by 10% from year 1 to year 2, what happened to the real wages of workers in Louland during this time? Explain.
.
This measure is the best indicator of standard of living in a country
GDP per capita
Assume that Nepal is in long-run macroeconomic equilibrium and has an open economy.
A. Draw a correctly labeled graph of the aggregate demand, short-run aggregate supply, and long-run aggregate supply curves for Nepal, and show each of the following.
i.The current equilibrium real output and price level, labeled Y1and PL1, respectively ii. The full-employment output, labeled YF
B. Nepal and Thailand are trading partners. Assume that Thailand experiences an increase in real income. On your graph in part A, show the short-run effect of the increase in real income in Thailand on real output and the price level in Nepal, labeling the new short-run equilibrium real output Y2 and the new short-run equilibrium price level PL2
Diagram
Assume Malaysia’s economy is in a recession and its government currently has a balanced budget.
(a) Identify a specific fiscal policy action that the government of Malaysia would implement to address the recession.
(b) How will the fiscal policy action identified in part (a) affect the real interest rate in Malaysia? Explain.
(c) Malaysia and Japan are trading partners with flexible exchange rates. Malaysia’s currency is the ringgit (MYR), and Japan’s currency is the yen (JPY). Draw a correctly labeled graph of the foreign exchange market for the ringgit relative to the yen. Show the effect of the change in the real interest rate identified in part (b) on the international value of the ringgit.
a. Increase Govt Spending / Dec Taxes
b. Inc demand for loans, Rir Inc.
c. Demand up, ringgit appreciates
Why does the unemployment rate understate the unemployment level in the economy?
Ignores discouraged workers
Draw a reserve market model showing expansionary monetary policy
Diagram
Assuming MPC is .8 Government decreases taxes by $20 million that leads What is the overall impact on GDP?
What is 100M
Assume that at the short-run equilibrium, Nepal is experiencing a 400 million rupee recessionary gap. Policymakers in Nepal want to use discretionary fiscal policy to return the economy to full employment, and the marginal propensity to consume is 0.75. Calculate the minimum change and state the direction of change in government spending required to completely close the output gap in the short run. Show your work
Inc Gov Spending by $100 million rupees
Interest rates fall in Japan compared to the United States. Showing the change in supply of the Japanese yen in a FOREX diagram, what is the impact on the value of the Yen?
What is appreciate