December 2020

One possible explanation for higher naturalrates of unemployment in Western Europe than the United States is stronger labor unions (see Chapter 8). Strong labor unions may also increase the severity of a business cycle by increasing wage stickiness. Draw a graph of the aggregate labor market in equilibrium. Then assume that the demand for labor […]

Consider the following statement: “If all nominal wages and prices adjusted instantly, there would be no business cycle.” Do you agree with this statement? Briefly explain.

How is the output gap measured?Briefly discuss the reasons for macroeconomic stability in the United States from 1950 until the start of the recession of 2007–2009. Explain why the costs of the business cycle do not always average out over the cycle.

The following table shows data on the quarterly growth rate of real GDP for the U.S. economy: a. Using the rule-of-thumb definition of a recession, did this economy experience any recessions during this period? Briefly explain. b. The NBER says that a recession began during the fourth quarter of 1973 and ended during the first

Write two of the half-page worth essays. (One half-page essay for each topic)Topic 1. Statistics and ReliabilityIn this modern age, we are inundated with statistics (e.g., 50% of marriages end in divorce), so much so that many accept them at face value. Do you think statistics are a reliable source of data? Do you think,

For each of the following values of the marginal propensity to consume (MPC), find the value of the government purchases multiplier and the tax multiplier. a. MPC = 0.80 b. MPC = 0.75 c. MPC = 0.60

Suppose that the marginal propensity to consume is 0.80. a. If the government increases spending by $10 billion, what is the change in equilibrium real GDP? b. If the government increases taxes by $10 billion, what is the change in equilibrium real GDP? c. If the government increases taxes by $10 billion at the same

Considerthe following information on an economy (all values are in trillions of 2005 dollars): a. Calculate equilibrium real GDP. b. Now suppose that all the information given in part (a) remains the same except that taxes equal $2.0 trillion and transfers equal $1.5 trillion. Calculate equilibrium real GDP. c. Now suppose that potential GDP equals

Using data from the St. Louis Federal Reserve (FRED) (http://research.stlouisfed.org/fred2/), analyze the long-term real interest rate. a. For 2003 to the present, download monthly data for the 10-year constant maturity U.S. Treasury security (GS10) as a measure of the nominal interest rate and the 10-year U.S. Treasury inflation protected security (FII10) as a measure of

Please type up your answers. Make sure to clearly identify which question and part you are answering. Please do all the parts as specified. To strengthen your answers use specific examples and quotes from the readings to support your points and identify your source using a parenthetical citation (author last name, pg# ). Do not