Economics Answers

C=100+0.8Yd
I=200
G=200
X=1000
M=20+0.2Y
(1) Equilibirium output
(2) Value of multiplier

when the price of a jar of jelly decreased from $4 to $2, suppliers of jelly decreased production from 250,000 jars to 150,000 jars. What is the price elasticity of supply in this case? What is the interpretation of the estimated elasticity?

If the no-trade domestic price of copper wire in Canada is $20 per unit and the world price is $24 per unit, then Canada will have an excess __________, which it will then __________.

I will venture a guess that you never expected to see the word neuroscience used in an economics course, yet here it is describing the tenants of behavioral economics. Richard Thaler has now won a Nobel Prize developing the theory on this new approach to economic decision making. What he does is to join the tenants of economic rationality with psychology in decision making. Provide an example of your behavior which made sense to you but was perhaps not strictly rational in the economic sense.

Money and Banking

2. What happens to money demand if _______?
a. The interest rate on bonds falls
b. Liquidity of other assets rise.

Chapter 20

3. The effect of a decrease in the U.S. interest rate on U.S. net exports.
a. If the interest rate in the U.S. falls foreigners will want to purchase ___________ U.S. bonds,
b. so, the demand for U.S. currency in the market for foreign exchange _________
c. so, the exchange rate (the price of the U.S. dollar in terms of foreign currency) ________
d. so, U.S goods become relatively ____________
e. so, U.S. imports ________ and U.S exports _______
f. so, U.S. net exports _________.
g. Is this change in net exports an autonomous change?

Money and Banking
Chapter 19
1. M = 2000, V = 5, Y = 20,000.
a. What does P equal?
b. What does k equal?
c. If M rises to 2500 and V and Y stay the same what does P equal? Show your work
d. Does an increase in V indicate that people want to hold more money or less?
e. Using the original values if V rises to 10 what happens to k?
f. Using the original values if V rises to 10 what does P equal? Show your work
g. If the growth of velocity = 0, the money supply growth = 5%, and output growth = 2%, what is the inflation rate according to quantity theory? Show your work.

5. Explain the problem of double counting in national income measurement. Discuss with the help of a numerical example how it can be tackled by the value added method.

4. What are the major objectives of macroeconomics? Write a brief definition of each of these objectives. Explain carefully why each objective is important.

3. Define the following carefully and give an example of each:
(a) Consumption, (b) Gross private domestic investment, (c) Government consumption and investment purchases (in GDP), (d) Government transfer payment (not in GDP), and (e) Exports.

1. You sometimes hear, “You can’t add apples and oranges.” Show that we can and do add apples and oranges in the national accounts. Explain how.