Questions from Macroeconomics

Q: Consider the following simple monetary policy rule: Rt −

Consider the following simple monetary policy rule: Rt −

Q: Suppose the parameters of the IS curve are

Suppose the parameters of the IS curve are

Q: Suppose scientists discover a new way to extract oil from deposits that

Suppose scientists discover a new way to extract oil from deposits that were previously thought to be unrecoverable. The extra supply of oil leads oil prices to decline by $5 per barrel. Explain the e...

Q: Suppose velocity is constant, the growth rate of real GDP is

Suppose velocity is constant, the growth rate of real GDP is 3% per year, and the growth rate of money is 5% per year. Calculate the long- run rate of inflation according to the quantity theory in ea...

Q: Suppose the Fed announces today that it is lowering the fed funds

Suppose the Fed announces today that it is lowering the fed funds rate by 50 “basis points” (that is, by half a percentage point). Using the IS- MP diagram, explain what happens to economic activity i...

Q: The Fisher equation relates real (R) and nominal (i

The Fisher equation relates real (R) and nominal (i) interest rates to the rate of inflation (

Q: Japanese GDP in 2012 was 468 trillion yen (U.S

Japanese GDP in 2012 was 468 trillion yen (U.S. GDP was $16.2 trillion). The exchange rate in 2012 was 79.8 yen per dollar. Contrary to China and India, however, Japan had higher prices than the Unite...

Q: Suppose the economy has a natural rate of unemployment of 5%.

Suppose the economy has a natural rate of unemployment of 5%. (a) Suppose short- run output over the next 4 years is +1%, 0%, −1%, and −2%. According to Okun’s law, what unemployment rates would we...

Q: Consider the following (made- up) statistics for some economies

Consider the following (made- up) statistics for some economies. Assume the exponent on capital is 1/3 and that the labor composition is unchanged. For each economy, compute the growth rate of TFP. (a...

Q: Suppose xt =(1.04)t and yt =(1

Suppose xt =(1.04)t and yt =(1.02)t. Calculate the growth rate of zt in each of the following cases: (a) z = xy (b) z = x/y (c) z = y/x (d) z = x1/2y1/2 (e) z =(x/y)2 (f) z = x-1/3y2/3