MACROECONOMICS (LL)
MACROECONOMICS (LL)
21st Edition
ISBN: 9781260186949
Author: McConnell
Publisher: MCG
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Chapter 16, Problem 7DQ
To determine

Cyclical Asymmetry and the Liquidity Trap.

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54) If a higher inflation is expected, what would you expect to happen to the shape of the yield curve? Why? 55) What is the shape of the yield curve when short rates are expected to fall in the medium term, and then increase? Demonstrate this graphically. 56) What is the shape of the yield curve when short-term rates are expected to rise sharply in the mid-term and moderately in the long-term? 57) When interest rates on 1-2-3-4-5 year bonds are 2.0, 2.1, 2.3, 2.4, and 2.5 percent respectively, what information do we derive on future economic growth and real output?
D7 Suppose that people hold 17 cents out of every dollar of deposits as currency. Suppose that banks hold 13 cents out of every dollar of deposits as excess reserves. If the Fed buys $100 billion worth of Treasury securities on the open market, what is the change in the money supply? Make sure to express your answers in billions. Make sure to round your answers to the nearest 100th decimal points. For example, 24.56 for $24.56 billion.
11. Since 1990, money supply in the Japanese economy has doubled. Over the same period,nominal GDP in Japan has stayed almost constant. According to the Quantity Theory of Money,this suggests thata) the level of real GDP must have decreased.b) the level of real GDP must have increased.c) the velocity of money must have decreased.d) none of the above   13. According to the trilemma, which of the following is a potential cost of adopting a flexibleexchange rate regime?a) A country may have to restrict the size of capital flows.b) A country may su↵er from a volatile exchange rate.c) A country loses the ability to conduct independent monetary policy.d) None of the above. 14. In an open economy, if the level of net exports rises, it must be the case thata) there is an increase in saving.b) there is an increase in investment.c) the value of saving less investment must fall.d) none of the above
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