econ final

Question 1

expenditure GDP equation

Answer 1

Y=C+I+G+NX

Question 2

labor force and unemployment rate

Answer 2

LF = E+U
unemployment rate = U/LF

Question 3

CPI and percent change

Answer 3

price basket current / price basket base x 100

percent change = new-og/og

Question 4

r interest rate

Answer 4

nominal interest rate (i) - inflation (CPI)

Question 5

fisher equation and costs of inflation

Answer 5

i = r - ∏expected
r = i - ∏actual

Question 6

general production function

Answer 6

Y = Af(K,L,H,R)

Question 7

explicit production function

Answer 7

Y=Ak^a * L^1-a

y=Ak^a

Question 8

increase in savings (solow growth)

Answer 8

increases i curve. short term positive growth break ss, long term back to 0, change in ssconsumption ambiguous

Question 9

increase in A (tech) (solow growth)

Answer 9

increases i and y curve. short term positive growth break ss, long term back to 0, change in ssconsumption positive

Question 10

increase in n or o (pop growth or depreciation) (solow growth)

Answer 10

increase n+o line. short run negative growth, long run back to 0, ssconsumption goes down

Question 11

numbers and steady states formulas

Answer 11

kss = SA/(n+o) ^1/1-a
y=Ak^a
i=sy
c=(1-s)y

Question 12

marginal analysis compares what in marginal cost of production

Answer 12

MPL and # MCL

Question 13

increase in separation rate (search and matching model of labor)

Answer 13

decrease value of employment (Ve curve compresses, UpH(w*) shifts right and s(1-u) shifts right (upward pressure on unemployment)

Question 14

increase in wage taxes (search and matching model of labor)

Answer 14

decreases value of employment (Ve curve compressews, UpHw* shifts right (upward pressure on unemployment)

Question 15

increase in unemployment benefits (search and matching model of labor)

Answer 15

increases value of unemployment (line moves up), UpHw* moves right (upward pressure on unemployment)

Question 16

increase in frequency of jobs offered (search and matching model of labor)

Answer 16

increases value of unemployment (line moves up), UpHw* moves right (upward pressure on unemployment)

Question 17

long term equilibrium unemployment rate

Answer 17

U= s/PH(w*)+s

Question 18

p1: (two period consumer model)

Answer 18

y1=c1+b

Question 19

p2 (two period consumer model)

Answer 19

y2+(1+r)b

Question 20

LBC (two period consumer model)

Answer 20

y2+(1+r)(y1-c1)

y1 + y2/(1+r) = c1 + c2/(1+r)

Question 21

increase in p1 income (two period consumer model)

Answer 21

increases c1, c2, y1, and b

Question 22

increase in p2 income (two period consumer model)

Answer 22

increases c1 and c2, decreases b

Question 23

substitution effect increase in r (two period consumer model)

Answer 23

c1 decrease c2 increase s increase

Question 24

wealth effect increase in r for a borrower (two period consumer model)

Answer 24

c1 decrease c2 decrease s increase

Question 25

wealth effect increase in r for a saver (two period consumer model)

Answer 25

c1 increase c2 increase s decrease

Question 26

increase in current income (loanable funds)

Answer 26

increases SLF

Question 27

expected decrease in future income (loanable funds)

Answer 27

increases SLF

Question 28

decrease in current income (loanable funds)

Answer 28

decreases SLF

Question 29

increase in gov't purchases (loanable funds)

Answer 29

decreases SLF

Question 30

increase in MPK (loanable funds)

Answer 30

increase DLF and MPK ofc

Question 31

increase in enviro reg (loanable funds)

Answer 31

decrease DLF and increase UCC

Question 32

UCC

Answer 32

Pk(r+o)

Question 33

public saving

Answer 33

G-T

Question 34

private savings

Answer 34

Y-C-T

Question 35

purchase of bonds (money market)

Answer 35

expansionary increase SM

Question 36

sale of bonds (money market)

Answer 36

contractionary decrease SM

Question 37

lowering reserve requirement

Answer 37

expansionary increase SM

Question 38

lowering discount rate

Answer 38

expansionary increase SM

Question 39

phillips curve

Answer 39

Wr = Wn(Pe)/P

Question 40

if pi > pi e

Answer 40

hiring, unemployment goes down

Question 41

if pi < pi e

Answer 41

unemployment goes up

Question 42

exchange rates

Answer 42

1 = NER ( Pd/Pf)

Question 43

wealth effect (aggregate)

Answer 43

prices decreases, consumption increases

Question 44

interest rate effect (aggregate)

Answer 44

price decrease, DM decrease, savings and SLF increase, r decreases, OC of I decreases, I increases

Question 45

exchange rate effect (Aggregate)

Answer 45

price decrease, r decrease, lower return on domestic assets, SNCO increase, RER decrease, NX increase

Question 46

AD (aggregate)

Answer 46

C+I+G+NX

Question 47

SRAS (aggregate

Answer 47

Y* + a(P-Pe)

Question 48

LRAS

Answer 48

Af(K,L,H,R)

Question 49

gov't stimulus (policy) + multiplier

Answer 49

boosting AD thru spending gov multiplier: 1/1-MPC

Question 50

spending on public goods (policy)

Answer 50

increase AD, SRAS, and LRAS

Question 51

open market purchase of bonds (policy)

Answer 51

increases SM and SLF

Question 52

corporate tax cuts (policy)

Answer 52

increase K, increase I, increase AD SRAS and LRAS

Question 53

crowding out from gov't stimulus (policy)

Answer 53

DM increase, SLF decrease, AD decrease, LRAS decrease