This document contains 4 problems from a macroeconomics tutorial relating to Blanchard chapters 6 and 7 on price and wage setting models. Problem 1 asks students to discuss the fallacies in arguments that a lower price level can stimulate economic activity in a closed economy. Problem 2 involves deriving the AD curve from the IS-LM model and explaining why the AD and AS curves are downward and upward sloping respectively. Problem 3 analyzes the effects of increased competition lowering markups in a PS-WS model. Problem 4 asks students to use the WS-PS-AD-AS model to assess the short and medium-run effects of reducing unemployment benefits.
This short paper is a straightforward continuation of Sauramo (1998). The aim of that paper was to analyse the boom of the late eighties and the depression of the early nineties by estimating structural VAR models which were based on the utilization of the traditional aggregate demand6aggregate supply framework. These models typically belong to the class of IS-LM models which have been augmented with a Phillips
curve.
This short paper is a straightforward continuation of Sauramo (1998). The aim of that paper was to analyse the boom of the late eighties and the depression of the early nineties by estimating structural VAR models which were based on the utilization of the traditional aggregate demand6aggregate supply framework. These models typically belong to the class of IS-LM models which have been augmented with a Phillips
curve.
1) To understand the underlying structure of Time Series represented by sequence of observations by breaking it down to its components.
2) To fit a mathematical model and proceed to forecast the future.
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Cyclical Changes
In a temporary layoff, an employer “suspends” an employee’s job, generally because of slack demand. Both the employer and the employee expect their relationship to resume when economic conditions improve. The employer may even help the employee apply for unemployment insurance benefits so that he or she is more likely to wait out the layoff instead of taking another job.When layoffs are temporary, subsequent recalls can take place quickly, fueling fast payroll growth.
Structural Changes
By contrast, a permanent layoff severs the relationship
between the employer and the employee. The employer
eliminates the job for any of a variety of reasons, including a
permanent fall in demand, technological change, reorganization of production, and local or international outsourcing. Even an employer that ultimately decides to fill the job again will need to search for a new employee.
Together with our findings on temporary layoffs, it suggests that the two most recent recessions were more strongly structural than recessions past.
1) To understand the underlying structure of Time Series represented by sequence of observations by breaking it down to its components.
2) To fit a mathematical model and proceed to forecast the future.
Smu Mba Sem 3 Marketing Fall 2014 Assignments, Smu Mba Sem 3 Finance Fall 2014 Assignments, smu solved assignments, smu mba assignments, smu assignments, smu mba fall drive assignments, smu mba sem 3 assignments
Cyclical Changes
In a temporary layoff, an employer “suspends” an employee’s job, generally because of slack demand. Both the employer and the employee expect their relationship to resume when economic conditions improve. The employer may even help the employee apply for unemployment insurance benefits so that he or she is more likely to wait out the layoff instead of taking another job.When layoffs are temporary, subsequent recalls can take place quickly, fueling fast payroll growth.
Structural Changes
By contrast, a permanent layoff severs the relationship
between the employer and the employee. The employer
eliminates the job for any of a variety of reasons, including a
permanent fall in demand, technological change, reorganization of production, and local or international outsourcing. Even an employer that ultimately decides to fill the job again will need to search for a new employee.
Together with our findings on temporary layoffs, it suggests that the two most recent recessions were more strongly structural than recessions past.
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Laurent Ferrara's comments on: ”Volatility spillovers of Federal Reserve & EC...Soledad Zignago
Laurent Ferrara's comments on: ”Volatility spillovers of Federal Reserve and ECB balance sheet expansions to EMEs” by A. Apostolou and J. Beirne, Global financial linkages and monetary policy transmission, #BdFeco conference, Paris, Friday 30 June 2017. Other presentations and discussions available online https://www.banque-france.fr/conferences-et-medias/seminaires-colloques-et-symposiums/conferences-de-recherche-et-symposiums/global-financial-linkages-and-monetary-policy-transmission
ANSWER SHEETIMPORTANT STUDENT PLEASE COMPLETE ALL INFORMATION B.docxrossskuddershamus
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Instructor: David Byres. Course: BIOL 101 Section: 6982
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Latest deadline for submission: 11:59p.m. 7/26/2015
Multiple Choice (Answer 30 Questions)
Type in the letter that represents your best answer to the corresponding question from the original final exam document.
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5. 20.
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Short Answer (Answer 3 Questions)
Complete these answers in your own words. Follow instructions in the Final Examination document. Answer all questions according to the instructions. Number each question here according to its number in the Final Examination document provided by your instructor. Each answer should be between two paragraphs and half a page in length.
Essay (Answer 2 Questions)
Complete these answers in your own words. Follow instructions in the Final Examination document. Number each question here according to its number in the Final Examination document provided by your instructor. Each answer should be roughly one page in length.
103:
Intermediate
Macroeconomics
Homework
4
Due
on
23rd
July
2015
Topic
7a:
Income
and
Spending
Conceptual
questions:
1. We call the model of income determination developed in this chapter a Keynesian
one. What makes it Keynesian, as opposed to classical?
2. What is an autonomous variable? What components of aggregate demand have
we specified, in this chapter, as being autonomous?
3. Why do we call mechanisms such as proportional income taxes and the welfare
system automatic stabilizers? Choose one of these mechanisms and explain
carefully how and why it affects fluctuations in output.
4. Show analytically what happens to the budget surplus when government increases
its expenditures.
Technical Questions:
5. Here we investigate a particular example of the model studied in Sections 9-2 and
9-3 with no government. Suppose the consumption function is given by C = 100 +
.8Y, while investment is given by I = 50.
a. What is the equilibrium level of income in this case?
b..
THE PROBABILITY OF A BUSINESS FAILING IN THIS ECONOMYA situation.docxssusera34210
THE PROBABILITY OF A BUSINESS FAILING IN THIS ECONOMY
A situation under which a company or any other business stops operations because of its inability to generate adequate revenue to make for its expenses is called Business failure. For instance, in case a company is not able to pay off its debt, it may file its case for bankruptcy and thereafter cease operating. Generally, business failures happen in the first year of its operations because the owner of the business is not capable of competing for various other reasons.
Inspite of the size and nature of operation any business today, an important threat of almost all the businesses is insolvency. The evidences present show that the rate of business failure has become high particularly in the last two decades. It is also interesting to note that during the 1980’s certain sectors of the UK economy, such as small industrial businesses in depressed areas, experienced failure rates as high as 50% over a five-year period. There are many studies in the economic literature which focuses on the explanation of relationship in between the fluctuations which takes place in all the measures of economic activities and the Business Failures. The empirical studies have time and again researched that their exists a correlation between the repeated variations in business failures and the fluctuations in macroeconomic aggregates. The macroeconomic conditions of any country can have an effect on the health of the businesses of the corporate sector. An increase in the interest rate which is current in effect in any country and a strict monetary policy can change the cost of borrowing for companies in a great way, deteriorate the financial position of any company very badly, as a result of which the corporate sector gets destabilized. In case of a change in the level of inflation, the volatility of cash flows gets affected and at the same time, if there is higher inflation, the firm’s ability to pay back the interests gets reduced. The result of the changes in the inflation rate is that the risk of financial distress increases thereby threatening the existence of many firms. Many valuable investment opportunities will be missed by the companies if there is a restriction on forwarding of credit to the companies arising out of credit rationing. The firms face many difficulties in raising the external finance to fund their working capital requirements to maintain the operations ongoing, specifically when the companies are in financial difficulties. Although these firms can be economically feasible in the long run but they are unable to protect their selves from going bankrupt in the short run, leading to a higher probability of corporate failures. The general economic conditions of any country can also be directly related to the company’s survival in that country. Economic recession narrows the gap in between the cash flow and service of debt in general and thereby creates financial distress in the country. With th ...
Chapter 1 57.What is the difference between recession and de.docxsleeperharwell
Chapter 1
57.
What is the difference between recession and depression in an economy? Provide an example of depression from the real world that has hit the global economy.
Use the following to answer question 58:
Answer: When there is a mild fall in the gross domestic product (GDP) of an economy over a period of time it leads to recession in the economy. If the intensity of the fall in GDP is severe over a period of time, then it turns into a depression. Recession is cyclic in nature; that is, it repeats itself over a period of time in an economy. A famous example of depression is that of the Great Depression of the 1930s that occurred in the United States and affected the global economy. Even the financial crisis of 2008-2009 in the United States was very much reminiscent of the Great Depression.
58.
Refer to the following graph and identify the years for which Country A and Country B experienced recession.
Country A experienced its recession during 2003 and its early recovery during 2004. Country B experienced its first recession during 2002 and its early recovery in 2003. Country B experienced a second recession in 2007.
59.
Why do we call macroeconomics an imperfect science? Explain.
The study of macroeconomics depends mainly upon the historical data on different economies. Macroeconomists analyze these data to explain changes occurring in different economic parameters (income, prices, unemployment, etc.) and formulate policies. Additionally, macroeconomic studies cannot be conducted in controlled experiments, as in biology or chemistry, for example. In this way, macroeconomists are similar to weather forecasters.
60.
Are the terms “market clearing” and “equilibrium” one and the same? Explain.
Yes, both terms represent the same notion: the balance between supply and demand. It is the balancing point at which everything that is produced gets sold and fulfills the entire demand. Thus, if all other things remain constant, then there is no tendency to change the quantity supplied and demanded at this point.
61.
Do you agree with the statement, “macroeconomics rests on the foundation of microeconomics”? Explain.
Macroeconomics involves studying the aggregate of economic variables related to individual decision making parameters, which are microeconomic (think of individuals' expenses, investments, etc.). That is to say, the total expenditure in an economy is the aggregate (sum) of all the expenditures done by all consumers in that economy, or the total investment done in an economy is the aggregate (sum) of all individual investments done by firms in that economy. This reflects that macroeconomic study rests on the foundation of microeconomics.
62.
Give two examples of macroeconomic variables and microeconomic variables.
The income of your father is a microeconomic variable, while the gross domestic product (GDP) of your country is a macroeconomic variable. The money your father saves in the bank is a microeconomic va.
1. Department of Economics Macroeconomics
BSc(B)/HA, 2nd semester, Spring 2010
To be discussed at the 4th tutorial
Relates mainly to Blanchard chapters 6 and 7
Problem set 4
Problem 1 (chapter 6 and 7)
Even after having read Blanchard most students appear to find it completely self-evident that
a lower price level in a closed economy cannot but stimulate economic activity. It appeared to
be taken for granted, for instance, by a huge majority of the students attending the recent
exam in Macroeconomics, Part 2, that took place in January 2009.
When asked the question
Discuss how such a disinflation [= declining inflation] contributes towards stimulating aggregate
demand (thus making unemployment decline …)
most of them argued along the following lines:
(1) lower inflation (lower rate of change of the price level) => lower price level=> higher
“purchasing power” (~ real income) => higher real demand (Z) => higher equilibrium
output => lower unemployment
or, somewhat similarly,
(2) lower inflation (lower rate of change of the price level) => lower price level=> higher
real wage (W/P) => higher real demand (Z) => higher equilibrium output =>lower
unemployment
-------------------------------------
Please discuss the fallacies embedded in each of these “causal chains”
Problem 2 (chapters 7 and 5)
1) Derive the AD-curve from the IS-LM-model, using diagrams and/or algebra
2) Repeat – but now just in words – why the AD curve is negatively sloped
3) All students know, seemingly, that the AS curve is upward sloping. Experience shows,
however, that only a minority are able to explain why this is so. Therefore: Explain,
carefully, why the AS-curve (in Blanchard) is upward sloping
4) Along a certain AS curve, the expected price level Pe is given. What happens to a given
AS curve if, for some reason, the expected price level goes up by, say, 12%? Be sure
you understand the mechanism(s) behind your answer
5) Where, along a given AS curve, will the actual price level P be equal to the (given)
expected price level Pe?
Page 1 of 2
2. Problem 3 (chapters 6 and 7)
This problem appeared as Problem 2 in the paper set at the winterexamination 1999/2000
(BSc(B), Part 2) and was assigned the weight 1/3:
Years ago the chairmen (“vismændene”) of the Danish Economic Council wrote that
"there is a lack of efficient competition in parts of the economy where a number of sectors are
characterised by high prices and an extra-normal profit [...]. It is, therefore, necessary that
structural adjustments be made on the goods market." (Danish Economy - Autumn 1995, p.157)
In order to illustrate the beneficial effects to society of an increased degree of competition,
this report also included a calculation of how a reduction of the firms’ mark up would
influence a series of macroeconomic variables.
These analyses of the Economic Advisors are based on a macroeconomic model which
contains a specification of the price and wage setting which is similar to Blanchard’s PS-WS
model.
Let us assume that the wage and price setting relations can be described as:
PS : W 1
P
1
WS: We F u, z
P
1) Briefly explain the economic contents in the two relations
Assume that antitrust legislation is enforced more vigorously so that the competition on the
goods market increases. In the PS-WS model this can be modelled as a reduction of the mark
up factor,
2) Analyse and explain the effects this has on the natural rate of unemployment, the natural
level of production and real wages
3) Show and explain the adjustment to the new medium-run equilibrium in an AS-AD
graph
Problem 4 (chapters 7 and 6)
Use the WS-PS-and-AD-AS model to assess the short-run and medium-run consequences of a
reduction in unemployment benefits
caution!: this is not quite as simple as the analysis of, for instance, fiscal or monetary
policy. Why not? Because here we are once more considering a shock which does not,
according to chapter 6, leave uN and hence YN unaffected
Page 2 of 2