Macro Problem Sets 2&3

if 500,000 in new taxes is raised and spent on building a new school and 300,000 in private spending would have been spent anyway, how much is added to short-run aggregate demand

200000

there is a persistent fear that there will be a high level of deflation. suppose that herb is in debt and has to pay a 5.75% nominal interest rate. he expects inflation to be 2%. instead inflation is -1% what is the interest rate that herb is expected to pay? what is the real interest rate that herb is actually paying? because the economy is experiencing a deflation of -1% instead of inflation of 2%. herbs real interest rate, compared to what he expected to pay has... -increased, so herb feels poorer -increased, so herb feels richer -decreased, so herb feels poorer -decreased, so herb feels richer

3.75%, 6.75%, and increased, so herb feels poorer

how much income tac is owed on an income of 50,000?

4480

this economy initially begins at point A and a negative supply shock takes it to point Y. taking the economy back to a 3% real GDP growth rate would require -an unemployment rate of -2% -a monetary expansion of 21% -an inflation rate of 16% -an inflation rate much greater than 16%

an inflation rate much greater than 16%

identify wether the given items are examples of imports, exports, or neither. assume the united states is the domestic country -heath lives in the usa and purchases a video gamne from japan -lucy lives in tennesse and buys an orange from florida -a chinese consumer purchases a tv from china -a farmer in iowa sells corn to a food processing plant in china -conocophillips drills for oil in the usa and sells the oil to refineries in brazil and mexico

import, neither, neither, export, and export

suppose the fed sells 300 billion in government securities and the reserve ratio is 0.2 calculate the resulting change in the money supply which statement describes the impact on inflation and real GDP the fed's policy has in the short run? -inflation increases and real GDP decreases -inflation decreases and real GDP increases -inflation increases and real GDP increases -inflation decreases and real GDP decreases

inflation decreases and real GDP decreases

the grapgh shows the AD curve and the LRAS curve for an economy. suppose that the economy observes a reduction in the world price of oil, an input in many production processes how will this chnage affect the rate of inflation -inflation will rise -inflation will fall -inflation will be unchanged how will this change affect the growth rate -the growth rate will increase -the growth rate will fall -the growth rate will be unchanged

inflation will fall and the growth rate will increase

the graph shows the market for loanable funds. what is the effect of this change on the interest rate -it rises -it falls -it remains the same what is the effect of this change on consumption spending -it rises -it falls -it remains the same what is the effect of this change on private investment spending -it rises -it falls -it remains the same

it rises, it falls, and it falls

consider the world oil market diagrams presented in the figure. which of the panels correctly depicts what happened in the market for oil during the 1973 OPEC oil crisis -panel A -panel B -panel C -panel D

panel B

in the graph demonstrate the short-run effect of an increase in the growth rate of the money supply, assuming all else remains equal. what happens in the long-run? -the LRAS curve shifts to the right, and the real growth rate increases, with no change in the inflation rate -the SRAS curve shifts to the left, and the inflation rate increases, with no change in the growth rate -the AD curve shifts to the right, and both the real growth rate and inflation rate increase -as expectations adjust to the increase, all curves shift back to their original location

the SRAS curve shifts to the left, and the inflation rate increases, with no change in the growth rate