Intro to Macro Economics

Intro to Macro Economics

Assignment 7
Assignment 7

This assignment is for Module 7 and covers Chapter 26 from the text. Students should answer all questions. All questions are of equal value.

Question 1

a)      Explain and use a diagram to illustrate the short run and long run aggregate supply curve.
b)      Explain and use a diagram to illustrate the impact of an increase in the money wage rate on the short run aggregate supply curve.
c)      What could bring about a change in the money wage rate?
d)     Define stagflation.
e)      Use an AS/AD diagram to illustrate how a rise in oil prices would produce stagflation.

Question 2

a)      Identify the components of aggregate demand (AD).
b)      Give one example of spending for each component of AD.
c)      Define fiscal policy.
d)     Define monetary policy.

Question 3

a)      Define a recessionary gap.
b)      Use an AS/AD diagram to illustrate a recessionary gap.
c)      Define an inflationary gap.
d)     Use an AS/AD diagram to illustrate an inflationary gap.

Question 4

Explain and illustrate with two separate diagrams, the short run and long effects of an increase in aggregate demand that creates an inflationary gap.

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Assignment 6
Assignment 6

This assignment is for Module 6 and covers Chapter 25 from the text. Students should answer all questions. All questions are of equal value.

Question 1

a)      Briefly define the current account, capital account and official settlements account of a country’s balance of payments.
b)      Briefly explain why the sum of these accounts must balance.
c)      Explain why the demand curve for Canadian dollars slopes down.
d)     Explain why the supply curve for Canadian dollars slopes up.

Question 2

Use separate demand/supply diagrams for the Canadian dollar to illustrate whether following developments would increase/decrease the value of the loonie. Be sure to explain the reasoning behind any shift(s) in the curves.

a)      Canadian interest rates fall while US rates remain steady.
b)      Demand for Canadian oil exports rise.
c)      New study in the USA finds eating Canadian lobsters reduces heart disease.

Question 3

Use a separate demand/supply diagrams for the Canadian dollar to illustrate the following impacts on the Canadian dollar exchange rate. Make direct reference to your diagram in your explanation.

a)      Rising demand for Canadian oil exports is impacting the dollar and effecting Canadian exports of other goods.
b)      Rising demand for Canadian oil exports is impacting the dollar and effecting imports into Canada.

Question 4
a)      Use any credible source you desire (but provide your source) and summarize the reason(s) behind the recent movements in the value of the Canadian dollar (relative to the US dollar).
b)      Who are the “winners and losers” associated with a falling loonie?
c)      Who are the “winners and losers” associated with a rising loonie?

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Assignment 9
Assignment 9

This assignment is for Module 9 and covers Chapter 29 from the text. Students should answer all questions. All questions are of equal value.

Question 1

a)      Based on the information in the text. Identify the four basic sources of federal government revenue.
b)      Give an example of indirect taxes.
c)      Based on the information in the text. Identify the three basic categories of federal government expenditures (outlays).
d)     Give an example of a transfer payment.
e)      Explain the difference between a government’s deficit and its debt.

Question 2

a)      Identify the two tools that a government can use to for a fiscal stimulus (expansionary fiscal policy).
b)      Explain and use an AS/AD diagram to show the impacts of expansionary fiscal policy. Assume no supply side effects occur as a result of this policy.

Question 3

If contractionary fiscal policy will reduce real GDP and ultimately cause some unemployment, why would a government ever invoke such a policy? Explain and use an aggregate demand/supply diagram to illustrate. Assume no supply side effects occur as a result of this policy.

Question 4

Briefly discuss the how a discretionary fiscal stimulus is hampered by three time lags.

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Assignment 10
Assignment 10

This assignment is for Module 10 and covers Chapter 30 from the text. Students should answer all questions. All questions are of equal value.

Question 1

You may want to review Chapter 23, loanable funds market before attempting question 1.

a)      Define real economic investment.
b)      Explain the relationship between changes in interest rates and the quantity of real economic investment.
c)      Explain why a predictable rate of inflation makes real interest rates more predictable.
d)     Explain why unpredictable real interest rates hamper real economic investment.

Question 2

Explain and use an AS/AD diagram and a demand/supply diagram for the Canadian dollar to illustrate how the Bank of Canada can eliminate a recessionary gap with monetary policy. Note in the AS/AD diagram you do not need to draw the multiplied (AD +/- ?E) aggregate demand curve. Be sure to address the impact of monetary policy on all components of AD except for G.

Question 3

Explain and use an AS/AD diagram and a demand/supply diagram for the Canadian dollar to illustrate how the Bank of Canada can eliminate an inflationary gap with monetary policy. Note in the AS/AD diagram you do not need to draw the multiplied (AD +/- ?E) aggregate demand curve. Be sure to address the impact of monetary policy on all components of AD except for G.

Question 4

Use the internet to find a brief article that connects recent Canadian monetary policy to either question one or two above. Cut and paste the article into your assignment (cite the source) and be sure to explain how the article relates to this assignment.

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Assignment 5
Assignment 5

This assignment is for Module 5 and covers Chapter 24 from the text. Students should answer all questions. All questions are of equal value.

Question 1

a)      Briefly explain the three functions of money.
b)      Provide an original (non-text book) example of money serving each of these functions.
c)      Explain why credit cards are/are not money.

Question 2

a)      How does a reduction in the interest rate impact the quantity demanded for money? Explain and use a diagram in your answer.
b)      Given a constant supply of money, explain the impact of an increase in the demand for money. Use a diagram in your answer.

Question 3

a)      Explain the impact of reduction in GDP on the short run equilibrium interest rate. Use a diagram in your answer.
b)      Explain and illustrate with a money market diagram, how the Bank of Canada would respond if an existing short run equilibrium in the money market was eliminated by a decrease in the demand for money and the Bank of Canada wanted to restore the previous equilibrium interest rate.

Question 4

If we assume a constant velocity of money, use the Quantity Theory of Money to identify the impact of money supply growth in excess of real GDP growth.

Assignment 8
Assignment 8

This assignment is for Module 8 and covers Chapter 28 from the text. Students should answer all questions. All questions are of equal value.

Question 1

a)      Define demand-pull inflation.
b)      Explain and use two separate AS/AD diagrams to show the initial (short-run) effect and the money wage adjustment (long-run) effect of an increase in aggregate demand.

Question 2

Explain and use an AS/AD diagram to show a demand-pull inflation spiral.

Question 3

a)      Define cost-push inflation.
b)      Explain and use an AS/AD diagrams to show the initial effect of cost-push inflation.

Question 4
Explain and use an AS/AD diagram to illustrate the long run effects of expected demand – pull inflation.

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Assignment 3

This assignment is for Module 3 and covers Chapter 21 from the text. Students should answer all questions. All questions are of equal value.

Question 1

Given the figures in the table, calculate the values for A to C. Round your answers to one decimal (X.X%).

Nova Scotia 2013
Population of working age    781,500
Employed    449,500
Unemployed    45,400
Participation rate (%)    A
Unemployment rate (%)    B
Employment rate (%)    C

Question 2

Good    2013 Price    2013 Quantity    2010 Price
Pizza    $15 per pizza    30    $13 per pizza
Beer    $24 per dozen    20    $16 per dozen
Rent            $850 per month    12    $650 per month
Books    $48 per book    10    $89 per book

Suppose the table above contains all the goods the average student consumes.

a)      Calculate the annual consumer price index (2010 = 100) in 2013.
b)      Precisely interpret the value of the CPI figure you calculated in part a).
c)      Use you index from part a) to answer the following question. Show your calculations. If the average student income was $4,000 per month in 2010 and $6,500 in 2013, in which year did students have greater purchasing power (higher real income)?

Question 3

Use the information in the table below to fill in the missing values in the table. Round your GDP calculations to the nearest whole number, round your economic growth and inflation figures to one decimal. Show your calculations.

Year    Current $ GDP Million    Constant $ GDP Million    Economic Growth    GDP Deflator (2011=100)    GDP
Inflation%
2010    A    910    X    97.5    X
2011    925    925    1.65    100.0    E
2012    950    B    D    102.8    2.8
2013    975    935    D    C    E

A)    Current $ (nominal) GDP in 2010
B)    Constant ($ 2011) (real) GDP in 2012
C)    The GDP deflator (2011 = 100) in 2013
D)    Economic growth in 2012 and 2013
E)     Rate of inflation in  2011 and 2013

Question 4

Create a consistent numerical example, expressing the current price of comic as a price index (base year = 100), to explain the comic below. Be sure to explain your calculations.

Assignment 2
Assignment 2

This assignment is for Module 2 and covers Chapter 20 from the text. Students should answer all questions. All questions are of equal value.

Question 1

a)      Explain the difference between final and intermediate products.
b)      Explain in your own words the necessity of using final goods/services when calculating gross domestic product (GDP).
c)      Define investment (I) that is part of expenditure-based GDP and provide an example of such investment.
d)     Could net exports be positive or negative in any given year? Explain.

Question 2

Given the following information displays the only goods produced in an economy, calculate:

a)      Nominal GDP in 2002
b)      Nominal GDP in 2013
c)      Real GDP (2002$) in 2013
d)     Given that economic growth is the percentage change in real GDP across time, calculate economic growth in this economy from 2002 to 2013. Round your percentage change to two decimals (X.XX %).

Commodity    2002 Price    2002 Quantity    2013 Price    2013 Quantity
Good A    $100    650    $120    700
Good B    $200    800    $150    900
Good C    $300    100    $300    120

Question 3

a)      Explain why GDP per capita is a common measure of economic well-being and often used when comparing countries.
b)      Briefly explain some of the short-comings of GDP as a measure of living standards.

Question 4

Explain why consumer confidence plays such a key role in a country’s economic performance as measured by GDP growth. Review the components of GDP in Table 20.1 if necessary.