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Demographic studies show that the Hispanic populationof the United States is increasing. Traditionally, Hispanics have had higher-than-average rates of unemployment. However, it is also true that Hispanic women tend to have lower labor force participation rates (in other words, are less likely to enter the labor force) than women of other ethnic groups. How would […]

Using data from the St. Louis Federal Reserve(http://research.stlouisfed.org/fred2/), analyze the relationship between the output gap and cyclical unemployment. a. Download quarterly data on nominal GDP (GDP), nominal potential GDP (NGDPPOT), the unemployment rate (UNRATE), and the natural rate of unemployment (NROU) for the most recent quarter. Use the data to calculate the output gap. b.

Briefly explain whether you agree with the following statement: “Central banks control only short-term interest rates, but long-term interest rates are most important for economic activity. Therefore, monetary policy is not important in determining output.”

The following are data on the Treasury yield curve for July 17, 2012: Given these data, why would an investor have been willing to buy a one-year Treasury bill with an interest rate of only 0.18% when the investor could have bought a 30-year Treasury bond with an interest rate of 2.59%?

  Yield curves generally slope upward. A downward- sloping, or “inverted,” yield curve is often thought to signal a future recession. Why might this observation be true?

Suppose that today you observe the following interestrates on bonds with differing times to maturity: a. Assume that the expectations theory is correct, so that there is no term premium for a two-year bond or a three-year bond. Use the information above to calculate the expected interest rate on a one-year bond one year from

When President Obama and Brazilian President Rousseff met in 2012, the interest rate on a one-year U.S. Treasury bill was just 0.2%, while the interest rate on a comparable one-year Brazilian government bond was 7.8%. With the gap between these interest rates so large, it was easy for an investor to make a high return

Briefly explain in which of the three balance of payments accounts each of the following transactions would occur: a. An export of goods b. A purchase of bonds c. A gift to someone in another country d. A dividend paid on stock owned in another country

What is the purpose of the balance of payments? Briefly discuss the components of the current account, the capital account, and the financial account. What are a trade deficit, a current account deficit, and a financial account deficit? Is it possible for a country to run a balance of payments deficit?

A political columnist makes the following assertion: “China has a huge balance of trade surplus with the rest of the world. In addition, the rest of the world is investing huge amounts in China, which is the main way that China is able to fund investments in new factories.” Use your knowledge of the balance