Questions from Macroeconomics

Q: The medium-run equilibrium is characterized by four conditions: Output

The medium-run equilibrium is characterized by four conditions: Output is equal to potential output Y = Yn and the real policy rate rn must be chosen by the central bank so: The unemployment rate is e...

Q: This chapter assumes that expected inflation remains equal to the central bank’s

This chapter assumes that expected inflation remains equal to the central bank’s target rate of inflation. In Chapter 8, in the discussion of the Phillips curve, it was noted that expected inflation w...

Q: A shock to aggregate supply will also have different outcomes when there

A shock to aggregate supply will also have different outcomes when there are different assumptions about the formation of the level of expected inflation. As in Question 4, one assumption is that the...

Q: Suppose you are measuring annual GDP of a country by adding up

Suppose you are measuring annual GDP of a country by adding up the final value of all goods and services produced in the economy. Determine the effect on the country’s GDP for each of the following tr...

Q: Okun’s Law is written as u - u(-1) =

Okun’s Law is written as u - u(-1) = -0.4 (gY - 3%) a. What is the sign of u – u (-1) in a recession? What is the sign of u – u (-1) in a recovery? b. Explain where the 3% number comes from? c. Explai...

Q: Suppose the economy is operating at the zero lower bound for the

Suppose the economy is operating at the zero lower bound for the nominal policy rate; the initial equilibrium is at the positive target rate of inflation and the economy is resting at potential output...

Q: Consider the data in the Focus Box, “Deflation in the

Consider the data in the Focus Box, “Deflation in the Great Depression.” a. Do you believe that output had returned to its potential level in 1933? b. Which years s...

Q: Consider the data in the Focus Box, “Deflation in the

Consider the data in the Focus Box, “Deflation in the Great Depression.” a. Calculate real interest rates in each year making the assumption that the expected level of inflation is last year’s rate of...

Q: Using the information in this chapter, label each of the following

Using the information in this chapter, label each of the following statements true, false, or uncertain. Explain briefly. a. On a logarithmic scale, a variable that increases at 5% per year will move...

Q: Assume that every month the average student in Japan and the average

Assume that every month the average student in Japan and the average student in China buy the quantities and pay the prices indicated in the following table: a. Compute the Japanese consumption per...