We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Nobody downloaded yet

Macroeconomics Problem Set 3 - Assignment Example

Comments (0)
In the United States, the capital share of GDP is about 30%, the average growth in output is about 3% per year, the depreciation rate is about 4% per year, and the capital-output ratio is about 2.5. Suppose that the production function is Cobb-Douglas with y = kα , so that…
Download full paper
Macroeconomics Problem Set 3
Read TextPreview

Extract of sample
Macroeconomics Problem Set 3

Download file to see previous pages... d. What will the capital-output ratio be at the Golden Rule steady-state? (Hint: recall from Chapter 3 that for the Cobb-Douglas production function, the capital-output ratio is related to the marginal product of capital).
1. In this question, we examine how the goals of the Federal Reserve influence its response to shocks. Suppose that in scenario A, the Fed cares only about keeping the price level stable whereas in scenario B, the Fed cares only about keeping output and employment at their natural levels. Explain how in each scenario the Fed would respond to the following:
A decrease in velocity causes a downward shift on the aggregate demand. Prices are fixed in the short run meaning only output decreases. To ensure output and unemployment are at their natural rates Fed B should increase the money supply to attain the initial equilibrium where prices and output will be constant. Fed, A should also increase the money supply to shift the aggregate demand curve upwards since this is the only way to ensure stable prices at their original equilibrium.
This results to an upward shift of the supply curve. To ensure stable prices, Fed B should hold aggregate demand constant since prices will rise in the short run and then fall in the long run achieving the natural rate of unemployment. This might however result to a recession.
To keep output and unemployment at their natural rate Fed B should increase the money supply hence shift the aggregate demand curve upwards. This results to a new equilibrium at higher prices, but there is no loss in output.
Based on the quantity equation MV=PY, if Fed reduces the money supply by 5% the aggregate demand curve will shift downwards. A decrease in M will hence result in a decrease in PY provided V is constant.
In the short run, the assumption is that the price levels are fixed meaning that that the aggregate ...Download file to see next pagesRead More
Comments (0)
Click to create a comment or rate a document
Problem Set
100 people were randomly assigned to receive the new formula medication when they had a headache, and the other 150 people received the old formula medication. The time it took, in minutes, for each patient to no longer have a headache was recorded. The results from both of these clinical trials are shown below.
2 Pages(500 words)Assignment
Econ 157 Problem Set
Therefore the slope of the curve denotes the growth rate of inequality at low per-capita income levels and the rate of declining of inequality at high per-capita income levels. By drawing Lorenz Curves of two countries in the same panel the income
2 Pages(500 words)Assignment
Problem set 5
Silicon has the highest specific heat compared to the rest, thus, it would be the metal that would give off the most heat. Thus eating ice counteracts the exothermic processes
3 Pages(750 words)Assignment
Problem Set
same point in pregnancy as or earlier than Marcelle, (b) at a later point in pregnancy than Marcelle, and (c) between their due date and the point at which Marcelle gave birth. Repeat the SPSS Connection from page 105 on your computer. Copy and paste the SPSS output for the
1 Pages(250 words)Assignment
Problem set
This is a form of ambiguity and unnecessary prolixity. Such an answer was irrelevant, lacked order and was ludicrous. The humour comes to the idea of the biscuits being in the wrong place without explanation. The second issue is equally far
5 Pages(1250 words)Assignment
Module 3 Problem Set
how many outliers are there on each continuous variable; do they fall above and/or below the mean). What are ways to handle outliers on the continuous variables? Might there be some arguments against
1 Pages(250 words)Assignment
Macroeconomics Problem Set
K is a constant; it shows the amount of money that individuals are willing to hold for every dollar of income. It is inversely( k= 1/v) related to the velocity of money since holding money reduces the amount available for transaction and hence available amount exchanges
5 Pages(1250 words)Speech or Presentation
Problem Set 5 - Externalities and Efficiency
They are portrayed to use the real product like in the case a student who reads effectively using the glasses. It is quiet ironical that the glasses can provide a glance at opaque objects. 2. Do shortages caused by rent controls tend to be
2 Pages(500 words)Assignment
Econ Problem set
Inflation: for both January and March, FOMC’s reported inflation to have fallen further below the committee’s longer-run objective. Even though it appears that there is no difference in the January and March views, one can conclude that the
1 Pages(250 words)Assignment
Problem Set 6, 7, and 8
That how many household are likely to lie in that bracket? To express the strength of linkage or even co-occurrence between two variables in a range of -1 to
4 Pages(1000 words)Assignment
Let us find you another Assignment on topic Macroeconomics Problem Set 3 for FREE!
Contact us:
Contact Us Now
FREE Mobile Apps:
  • About StudentShare
  • Testimonials
  • FAQ
  • Blog
  • Free Essays
  • New Essays
  • Essays
  • The Newest Essay Topics
  • Index samples by all dates
Join us:
Contact Us