Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
We discussed the business cycle fact that money is a pro-cyclical economic statistic.
a) First, explain how the real business cycle theorists explain the pro-cyclical behavior of money. In the space below, draw three diagrams, a money market diagram, an IS - LM - FE diagram, and an aggregate demand - aggregate supply diagram. Start at point A and describe how the business cycle theorists explain the fact that money is leading and pro-cyclical as we move from point A to point B. Be sure to explain the move from point A to B in all three diagrams. Now show what would happen if the Fed did nothing and label as points C. Is this result desirable, why or why not? Do the real business cycle theorists believe that it is a good idea to fight recessions with expansionary monetary policy as defined by increases in M? Why or why not? Explain.
b) Now explain how the New Keynesians explain the pro-cyclical behavior of money. In the space below, draw a money market diagram, an IS - LM - FE diagram, and savings - investment diagram, an IS, LM, FE diagram, and an aggregate demand - aggregate supply diagram. Start at point A and allow the increase in M to move us to point B. Be sure to label all your diagrams completely. What does the power of expansionary monetary policy depend on? Be sure to mention the state of the economy in your discussion.
Elucidate how and why the unemployment rate fluctuates with the inflation rate as is depicted in the Short-Run Phillips Curve.
In order to show that perfectly competitive markets are efficient, economists assume that such markets are characterized by “perfect information.” How can imperfect information create inefficiency in what would otherwise be a competitive market?
There are pros and cons if policymakers use monetary and fiscal policy to stabilize the economy. Explain the main arguments in favor of economic stabilization. Explain why policy lags could make stabilization policies counterproductive.
Consider the general equilibrium model with two sectors of production using different CRTS technologies as reviewed in class. Instead of assuming that both sectors are perfectly com- petitive, assume that sector X is a monopoly while sector Y is a pe..
Your economy has a marginal propensity to consume (MPC) of 0.70. It is currently operating at a level at less than full employment. Prices appear to be sticky in this economy, but by some lucky stroke the rate of interest falls. Using the Keynesian C..
From the scenario, identify the possible illegal or unethical activities activities in which the print shop boss plans to engage in, and identify the consequences on society from an economic point of view.
Consider an overlapping-generations model with inside and outside money, where the rate of return on inside money is x, while the rate of return on outside money is 1 z. What is the effect on the deposit-to-currency ratio, nominal money stock M1 and ..
The Clean Air Act, a federal statute, establishes national air pollution standards for fleet vehicles such as buses, taxicabs, and trucks. The South Coast Air Quality Management District (South Coast) is a political entity of the state of California...
If you drive 20,000 miles per year and the price of gasoline for this analysis is assumed to be $4.00 per gallon, which model should you purchase?
Suppose the distribution of innate ability is distributed symmetrically throughout a population but which the wage distribution is positively skewed.
Critics of federal banking policy argue that deposit insurance is a key reason for banking failures. The banks enjoy a "heads I win, tails the government loses" proposition. Several possible reforms of deposit insurance have been suggested. For examp..
Models such as moving average, exponential smoothing, and linear trend use only:
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd