Questions from Macroeconomics

Q: Now suppose that the technological innovation occurs in the computer sector in

Now suppose that the technological innovation occurs in the computer sector in the South: one unit of southern labor can now produce 10 computers instead of 2. (Other parameters take their original va...

Q: Let’s redo the trade problem with algebra instead of numbers. Suppose

Let’s redo the trade problem with algebra instead of numbers. Suppose that one unit of labor produces xn apples in the North and xs apples in the South; one unit of labor can also pr...

Q: In the apple– computer example, suppose people in the North

In the apple– computer example, suppose people in the North have the right to charge an “entrance fee” to immigrants. Assume the world starts from the position of free trade and considers moving from...

Q: Look back at the Big Mac Index in Table 20.1

Look back at the Big Mac Index in Table 20.1. Compute the level of the exchange rate that would be needed to equalize the dollar price of the Big Mac across all countries. State whether ea...

Q: One could make a reasonable case that the United States in the

One could make a reasonable case that the United States in the past decade has been able to achieve all three goals of the policy trilemma: it sets its own monetary policy, it has open capital markets...

Q: Consider the way in which net exports depend on the real exchange

Consider the way in which net exports depend on the real exchange rate. Does the dependence of net exports on the real exchange rate make the IS curve steeper or flatter? What is the economic interpre...

Q: Look back at equation (20.3) in Section 20

Look back at equation (20.3) in Section 20.2. (a) Apply our growth rates rules (from Chapter 3) to this equation to express the growth rate of the exchange rate as a function o...

Q: Using the FRED database, search for the exchange rate of a

Using the FRED database, search for the exchange rate of a country of your choosing relative to the U.S. dollar (other than for the euro area or Japan, since we’ve already discussed those in the chapt...

Q: Suppose there is a large temporary decline in government purchases in the

Suppose there is a large temporary decline in government purchases in the economy, financed by an unspecified decline in future lump sum taxes. (a) Analyze the effect of the shock in the labor market...

Q: Suppose the European Central Bank decides to stimulate the European economy by

Suppose the European Central Bank decides to stimulate the European economy by reducing interest rates there. Use the AS/AD model to explain how and why this affects the U.S. economy in the short run....