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In the Mundell-Fleming model, what are the endogenous variables? You must be specific. Partial credit may be awarded, but you must have all the correct
- In the Mundell-Fleming model, what are the endogenous variables? You must be specific. Partial credit may be awarded, but you must have all the correct variables for full credit.
- Suppose that a borrower and a lender enter into a contract at a 10% interest rate on January 1, 2019. There is unexpected inflation throughout 2019. Is the real interest rate on Janurary 1, 2020 higher or lower than the expected interest rate when the contract was entered into? Explain with a sentence or two or a few lines (at most) of math.
- (Each blank is 2 points.) Consider aclosed economy that is currently in a long-run macroeconomic equilibrium.Suppose the government decreases its budget deficit while not changing government expenditures. Answer the following questions by using one of the following words or phrases (shifts right, shifts left, shifts up, shifts down,increase(s), decrease(s), remain(s) unchanged).Note that all comparisons are made to the original long-run equilibrium.
a.The IS curve.......and the LM curve.........
b.The AD curve.......
c.In the short-run, output.......
d.In the short run, prices will.........and in the long-run prices will......
e.In the long-run, the SRAS curve will.......
f.In the long-run, unemployment........
- (Each blank is 2 points.)Use any of the following words to fill in the blanks:(demand/ supply/ increases / decreases / remains unchanged/ right / left ). Suppose that a decreasein the quality of schools has encouraged people to quit their jobs and home school their children.As a result, the labor........curve shifts..........,and the equilibrium wage rate.........
- If the real interest rate is 4.5%and the nominalinterest rateis 2.1% what is the inflation rate?
- Does the following production function exhibit increasing, decreasing, or constant returns to scale?.
Answer by choosing one word.
- If the velocity of money is 2, nominalGDP is $100 billion, and the price of output is $5, what is the money supply?
- Suppose that money supply increases by 7%, output growth decreases by 2% and that the real interest rate is 8%. What is the nominal interest rate?
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