EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
Question
Chapter 37, Problem 5DQ
To determine
Macroeconomic instability.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
O
2
5
real interest rate
Refer to the figure above. If the economy starts at point 0, how would you illustrate the effect of a positive technological shock
that increases returns to investment in high-tech industries, by moving to point:
3
S2
S3 S1
3
2
*
5
D1 D2
Loanable funds
3. The world was growing at a constant
growth of 0.00007% rate between 100,000
BC and 1750AD. If birth rates per thousand
averaged 35 during this period , what was
the average death rate in equilibrium.
(approximately)
O 31
35
40
8. Which of the following statements is
correct?
A model is an exact representation of what
goes on in the economy.
Equilibrium in GDP growth rate is when the
growth rate is zero.
A model is an economic relationship that is
only represented by mathematics.
Equilibrium is a self-perpetuating situation
that does not change, unless a force for
change is introduced from the outside and
alters the basic data describing the
situation.
9. According to Malthus, which of the
following are the not the causes of
diminishing average product of labor?
Environmental effects of over-cultivation
(e.g. increased carbon emissions)
Increase in population growth rate
More labour is devoted to a fixed quantity
of land.
The new land brought into cultivation is of
inferior quality…
Refer to the figure A above.
Figure A
Figure B
Price
Price
P3
P2
`D,
P,
D2
Q,
Quantity
Q, Q2 Q,
Quantity
Assuming this market is representative of the economy as a whole, a negative
demand shock will:
1) increase both the price level and the quantity of output produced.
2) increase output, but leave prices unchanged.
O 3) lower the price level, but leave output unchanged.
4) raise the price level, but leave output unchanged.
Chapter 37 Solutions
EP ECONOMICS,AP EDITION-CONNECT ACCESS
Knowledge Booster
Similar questions
- Assume that the global average real interest rate is 5%. Britain witnesses severe inflation, where the current inflation rate is 10%. To curb inflation they decide to increase interest rates to 17%. Then the real rate of interest in Britain is results in increased the US dollar ($). which is for British bonds and in turn causes the British pound (£) to O 10%; higher; supply; depriciate 7%; higher; demand; appreciate O 7%; higher; demand; depriciate 5%; lower; supply; appreciate than the global average, which againstarrow_forwardDiscuss the following statements: a. The Keynesian multiplier is higher the higher is the degree of openness of the economy'. b. 'There is no easy policy answer when it comes to dealing with a negative supply shock'. Consider the following economy. The production function is F(K,L) = K0.3 Lº.7. The saving rate and the depreciation rate are respectively: s = 0.10 and 8 = 0.07. Population growth is 1%, i.e. n = 0.01. c. Derive the capital accumulation equation for this economy. d. Find the steady state value of the capital stock per capita. e. Suppose that the initial capital stock per capita is: k = 1.5. Discuss the process of convergence of the economy to the steady state using the appropriate diagram. f. Calculate the optimal saving rate of the economy and discuss whether the economy at the steady state over or under-accumulates capital.arrow_forwardConsider a 5-year bond with a face value of $500 and an annual coupon rate of 5%. If the yield is 9% then the market price of this bond will be approximately O $464 O $436 O $394 • $442 Question 19 In the IS-LM model with interest-setting monetary policy and endogenous money, an expansionary monetary policy will tend to cause an increase in the level of income, an increase in the transactions demand for money and an increase in the quantity of money O an increase in the level of real income, an increase in the asset demand for money and a reduction in the quantity of money an increase in the level of income, a decrease in the asset demand for money and a reduction in the quantity of money O adecrease in the level of income, an increase in the asset demand for money and an increase in the transactions demand for money Question 20 In the IS-LM model with interest setting monetary policy and endogenous money, an expansionary fiscal policy will tend to O increase the equilibrium level of…arrow_forward
- 9:22 1 LTE Aggregate D&S assignment chap 12.... Assignment Chapter 12 1. Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown below: LO5 Amount of Amount of Real GDP Real GDP Demanded, Billions Price Level Supplied, Billions (Price Index) $100 300 $450 200 250 400 300 200 300 400 150 200 500 100 100 a. Use these sets of data to graph the aggregate demand and aggregate supply curves. What is the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output? b. If the price level in this economy is 150, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount? If the price level is 250, will quantity demanded equal, exceed, or fall short of quantity supplied? By what amount? c. Suppose that buyers desire to purchase $200 billion of extra real output at each price level. Sketch in the new…arrow_forwardFill in the missing portion of the following table and answer the following questions: (Billions) (Negative figures are surpluses) Year 2007 2008 2009 2010 2011 Potential Nominal GDP O248 billion O262 billion O 413 billion O 348 billion 14,449 14,981 15,310 15,647 16.134 Actual Nominal GDP 14,478 14,719 14,419 14,964 15,518 Shortfall in Output -29 262 892 682 616 Tax Rate 25% 25% 25% 25% 25% What was the structural budget deficit in 2008? Actual Budget Deficit (Minus Automatic Stabilizors) 183 413 1,063 877 891 Cyclical Budget Deficit S 66 154 Structural Budget Deficit 190 707 Actual Budgot Deficit % of GDP 1.26% 5.86% 5.74%arrow_forwardAssume that in response to the Corona crisis, Portugal experiences a decrease in output of 1% and it is associated with a rise in the unemployment rate of 2 percentage points. What is the Okun's coefficient? O a. 0.4 O b. -2.0 Oc. -0.4 O d. 2.0 Which statement is true: When the short term interest rate in the Euro area is at zero percent, O a. the ECB, according to its mandate, cannot further reduce the policy rate O b. the ECB can stimulate the economy by lending directly to the government. the ECB can buy assets to reduce long term interest rates. O d. the ECB can steepen the Phillips curve by reducing the bargaining gap. Markup, nitial euilbrium markup Profit-maximizirg mark-up 210 Number of firms, a Equilibrium number of firms Figure: Equilibrium mark-ups () and the number of firms in the market (n) Consider the situation in the figure. Assume that there are no barriers to market entry, no subsidies, and the current mark-up a is lower than the initial equilibrium mark-up in A.…arrow_forward
- Suppose that the Phillip's curve and Okun's law are given, respectively, by n=n² - (U-U") and U-U^----(Y-P²) where is expected inflation, U" is the natural rate of unemployment, and Y is potential output. Supposing that = 22, U" =4, and Y² = 24, solve for the aggregate supply curve. O O O 17--2 10+ 1 x=10+ - Y =10--Y - 12/1arrow_forwardPlease use the graph to answer the questions. Given the market conditions, what will the prevailing interest rate be? O 6% 18% O 2% 10% Given the market conditions, how much money is borrowed in the loanable funds market? O $10 billion. $50 billion O$90 billion O $70 billion $30 billion. Interest rate (%) 18- 16- 14- 12. 10. 8- 6- + et 0 Demand Supply 60 70 80 90 10 20 30 40 50 Quantity of loanable funds (in billions of dollars)arrow_forwardcome is included 13. LAST WORD Assume that you borrow $5,000, and you pay back the $5,000 plus $250 in interest at the end of the year. Assuming no inflation, what is the real interest rate? What would the interest rate be if the $250 of interest had been dis- counted at the time the loan was made? What would the inter- est rate be if you were required to repay the loan in 12 equal monthly installments?arrow_forward
- Approximately how many people are employed in the federal bureaucracy? O 1 million-1.4 million O 1.5 million -1.7 million O2 million-2.4 million O 2.5 million - 3 millionarrow_forwardIf the Bank of Canada pays on deposits to LVTS participants an interest rate of 3.5 percent then the operating target of the Bank's monetary policy is O 1) 3 percent 2) 3.25 percent O 3) 3.75 percent O4) 4 percent O 5) 3.5 percentarrow_forwardSuppose aggregate demand in the economy sharply decines. Keynesian economists say that the price level (at least for a time) will and real output wil O remain constant; decrease Increase; remain constant remain constant; increase decrease; remain constant lo000arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning