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Posted: January 30th, 2023
11. Explain how a labor choice model may result in a
backward bending labor supply curve. What must the relative signs/sizes of the
income and substitutions effects be?
12. Suppose Susan has $1,000 in income this period,
but no income in the next period (this is only a two period example so nothing
happens after that). Demonstrate how Susan determines how much to save and how
much to consume in both periods. How would her level of savings change if real
interest rates increased?
13. Suppose consumption is given by C = 1000 + 0.75 x
Disposable Income while investment is given by I = 2000 â 20r. If government
expenditures equal 0 (no expenditures) and the tax rate is 1/3 (the government
collects 1/3 of income as tax revenue), what is the equation of the IS curve?
What are the values r-intercept and the Y-intercept?
14. Explain how sticky wages give rise to
unemployment savings and investment? What ramifications does this have for the
economy as the Fed begins slowing the
pace of growth of the money supply?
16. What does the
evidence around the Taylor Rule suggest about the Fedâs recent management of
the
money supply?
17. Suppose the Chinese economy
continues to slow. Using economic models, explain the likely impact on
the US.
18.
Explain the âzero-boundâ problem facing
monetary policy.
19.
Consider the article âCanada Does the
Global Economy a Favor.â How does this reading confirm
standard economic theory? How is it in conflict with
standard economic theory?
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