Questions from Macroeconomics

Q: Consider two possible inflation scenarios. In one, the inflation rate

Consider two possible inflation scenarios. In one, the inflation rate is 100% per year, but it has been at this level for three decades and the central bank says it will keep it there forever. In the...

Q: The complete version of the Thomas Sargent quote that began this chapter

The complete version of the Thomas Sargent quote that began this chapter is “Persistent high inflation is always and everywhere a fiscal phenomenon.” Why did Sargent include the modifiers “persistent...

Q: The amount of money the government raises from the inflation tax is

The amount of money the government raises from the inflation tax is DM. Use the FRED database for the last period in each year to answer the following questions: (a) How much currency was in circulati...

Q: As in exercise 15, the amount of money the government raises

As in exercise 15, the amount of money the government raises from the inflation tax is DM. (a) Write this amount as a ratio to nominal GDP. Multiply and divide by M to get an expression for the ratio...

Q: Using the FRED database, download a graph of the inflation rate

Using the FRED database, download a graph of the inflation rate for China and India. (For help with using the FRED data, see Case Study “The FRED Database” Chapter 2 on page 34.) (a) Display the two g...

Q: What is the key endogenous variable in the quantity theory? Explain

What is the key endogenous variable in the quantity theory? Explain the effect on this key variable of the following changes: (a) The money supply is doubled. (b) The velocity of money increases by 10...

Q: Suppose the real return on investing in a machine is 5%

Suppose the real return on investing in a machine is 5% and the inflation rate is 4%. (a) According to the Fisher equation, what should the nominal interest rate be? (b) Suppose bank A charges a nomin...

Q: Now we add some parameters to the labor market model:

Now we add some parameters to the labor market model: labor supply: Ls =

Q: Suppose the inflation rate is 5%. Suppose the marginal product of

Suppose the inflation rate is 5%. Suppose the marginal product of capital in a firm is 8% but that in the course of production, 6% of capital is worn out by depreciation. What is the nominal return as...

Q: Using the FRED database, locate the Congressional Budget Office’s measure of

Using the FRED database, locate the Congressional Budget Office’s measure of potential GDP by searching for “GDPPOT.” Using the “Add Data Series” option, add the series “GDPA” (real annual GDP) to thi...