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Macroeconomics (7th edition) by Olivier Blanchard
Monetary policy in a liquidity trap
Suppose that money demand is given by Md = $Y(0.25 - i) as long as interest rates are positive. The questions below then refer to situations where the interest rate is zero.
a. What is the demand for money when interest rates are zero and $Y = 80?
b. If $Y = 80, what is the smallest value of the money supply at which the interest rate is zero?
c. Once the interest rate is zero, can the central bank continue to increase the money supply?
d. The United States experienced a long period of zero interest rates afer 2009. Can you find evidence in the text that the money supply continued to increase over this period?
e. Go to the database at the Federal Reserve Bank of St. Louis known as FRED. Find the series BOGMBASE (the monetary base) and look at its behavior from 2010 to 2015. What happened to the monetary base? What happened to the federal funds rate in the same period?
What is the legal basis for the court's jurisdiction over BB Inc. Analyze and explain/justify your rationale: which court has jurisdiction to hear the case, and why?
A rightward shift of the long-run aggregate supply curve is caused by
Suppose demand is still described by P=5.10-0.80Q and supply is described by P=1.90+0.20Q. If there is a price floor of 2.94, what would be the consumer surplus in the market?
Terrorist attacks foster instability and may affect productivity over the short and long term. Do you think the September 11, 2001, terrorist attacks on the World Trade Center and the Pentagon affected short- or long-term productivity in the United S..
The average unleaded gasoline price for california residents on May 30, 2011, was $4.12 per gallon. Assuming that the base period (price index = 100) is 1996 and that the unleaded gasoline price for that year was $1.10 per gallon, compute the average..
A company currently pays a dividend of $2 per share (D=$2). It is estimated that the company’s dividend will grow at a rate of 20% per year for t the next 2 years, then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the r..
Suppose that the Big Paper Mill produces paper and discharges its dirty water into the Creek River. The following equations explain the demand and supply that the Big Paper Mill faces: Compute the equilibrium price and quantity for paper and label th..
Assume that demand for a commodity is represented by the equation P = 10 – 0.2 Q d, and supply by the equation P = 2 + 0.2 Qs where Qd and Q s are quantity demanded and quantity supplied, respectively, and P is the Price. Use the equilibrium conditio..
Francisco believes in planning ahead. He decides to ?nd out how much he can draw from a retirement account each year for 30 years if he invests exactly $1,000 each year in the account. Suppose that he can earn 5% on this long-term account, that he wi..
Describe the difference between a diminishing marginal product of labor and a negative marginal product of labor. Why would a profit-maximizing firm always choose to operate where the marginal product of labor is decreasing (but not negative)?
A decrease in demand for coffee can be cause by:
Innova Discs has two divisions—Standard and Premium. Each division has hundreds of different types of golf discs and disc golf products. The following information is available: What is the weighted-average contribution margin ratio?
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