This is an economic question, helpe solve it.

Exercise 4.6 Suppose GDP is $2,000, consumption expenditure is $1,700, government expenditure is $50, and net exports are $40. (a) What is business investment expenditure? (b) If exports are $350, what are imports? (c) In this example, net exports are positive. Could they be negative? Exercise 4.7 Consider the following information about a hypothetical economy: Year Nominal GDP GDP deflator Population (billions $) (2000 = 100) (millions $) 2012 750 104.0 25.0 2013 825 112.0 30.0 (a) Calculate the growth (percentage change) in nominal GDP from 2012 to 2013. Exercises for Chapter 4 = 101 (b) What was real GDP in 2012 and 2013? How much did real GDP grow? (c) If changes in the standard of living can be measured by changes in real per capita GDP, did growth in nominal and real GDP raise the standard of living in this economy from 2012 to 2013? (d) Explain the reasons for the change in standard of living that you have found.Exercise 7.5 Suppose the government raises its revenue by a net tax of 25 percent on income, * = 0.25. Further suppose that induced expenditure is 0.45Y (based on c = 0.8, t = 0.25 and m = 0.15). (a) What is the slope of the AE function? What is the size of the multiplier? (b) Autonomous expenditure by the non-government sectors (An) is 300 and government expen- diture is 400. What is the equilibrium income and output? What is the government's budget balance? (c) Now assume the government increases its expenditures by 100 to provide additional funding for national defense. What is the effect on equilibrium income and output? What is the effect on the government's budget balance? Exercise 7.6 An economy is in equilibrium at a real GDP of 750, but current estimates put potential output at Y'p = 850. (a) Is there an inflationary or a recessionary gap, and, if there is either, what is its size? (b) Research suggests that induced expenditure is 0.5Y (based on c = 0.75, m = 0.10, and f = 0.20). If there is a gap, what change in government expenditure would eliminate the gap? (c) If the government preferred to change its net tax rate to eliminate the gap, and not change government expenditure, what new tax rate would be required to eliminate the gap? Exercise 7.7 (a) Draw a diagram that shows the government's budget balance relative to national income. Explain briefly the vertical intercept of the budget function and its slope. (b) Using your diagram from (a), show the structural budget balance and a situation in which the actual balance is different from the structural balance. (c) Based on this diagram, show and explain the difference between the budget effects of auto- matic stabilization and discretionary fiscal policy. Exercise 7.8 Suppose as in Exercise 7.5 the government raises its revenue by a net tax of 25 percent on income, t = 0.25. Further suppose that induced expenditure is 0.45Y (based on c = 0.8, t = 0.25 and m = 0.15), autonomous private expenditure is 300 and government expenditure is 400. (a) What is the government's budget balance? (b) If the government has outstanding public debt equal to 500 what is the public debt to GDP ratio? (c) Suppose the government increases its expenditure by 100 without any increase in the tax rate. What are the new equilibrium GDP and the new budget balance? Explain why the change in the government's budget balance is different than the change in government expenditure. Exercises for Chapter 7 181 (d) What is the outstanding public debt and the public debt ratio in the new equilibrium, assum- ing the economy has reached its new equilibrium national income in one year?Exercise 8.1 What are the functions of money? What is money in Canada today? What is the money supply in Canada today? Are debit cards and credit cards money? Exercise 8.2 Since both central banks and commercial banks can create money what is the key difference between a central bank, like the Bank of Canada, and the many commercial banks in the financial industry? Exercise 8.3 Suppose the banks receive $100 cash from a new deposit of funds previously held outside the banking system. If banks operate with a 5% reserve ratio, use simple balance sheets to show by how much this new cash would affect lending and deposits of all banks in the system. Exercise 8.4 If banks have a 10% reserve ratio how much lending and deposit creation can they undertake after they receive a new $1,000 cash deposit? Would it be in the banks' interest to find ways to reduce any cash balances the public holds? Why? Exercise 8.5 What protection does the Canadian Deposit Insurance Corporation provide for your money if your bank is unable to pay cash to its depositors? Exercise 8.6 Define the money multiplier and explain how it might be used. Exercise 8.7 Suppose a crisis in financial markets, like the collapse of public willingness to hold large denomination term deposits in 2007 and 2008, increases the risk banks attach to lending and the non-bank public attaches to all bank deposits. What are the implications for the desired reserve ratio, the money supply multiplier, and the money supply? Exercise 8.8 Using a diagram illustrate and explain the determinants of the position and slope of the money supply function assuming an initial monetary base of $1,000 when rr = 5%. If the monetary base were to increase by 10% how would the money supply and the money supply function in your diagram change?Exercise 9.1 If the current market interest rate is 3 percent and a bond promises a coupon of $3 each year in perpetuity {forever}, what is the current market price of the bond?I Suppose you were holding such a bond and crnrent market interest rates fell from 3 percent to 2.5 percent. Would you be pleased or disappointed by the return on your bond holding? Milly?I Exerciso 9.2 Suppose you are holding a bond that will pay $5 each year for the next two years from today and mature two years from today. (a) lfcurrent two-year market interest rates are 5 percent, what is the market price of your bond'!II (b) If market interest rates rise tomorrow to 6 percent, what happens to the market price of your bond? (c) What is the "market risk" in holding bonds? Exercise 9.3 Draw a diagram to illustrate the relationship between the demand for real money balances [L], GDP {1"} and the interest rate (1'), L = kl' - hf, when real GDP has a given value 1'9. (a) Explain your choice of the intersection of your demand for money function with the hori zontal axis, and your choice of the slope of the function. (b) Using your diagram, illustrate and explain the quantity of real money balances demanded for a specic interest rate, say in. Pay particular attention to the underlying motives for holding these money balances. (c) Suppose interest rates declined from your initial assumption of 0 to a new lower rate r'l. Illustrate and explain the effect of the change in interest rates on the demand for money balances. (d) Holding interest rates constant at either is. or i], suppose real GDP were to increase. Illustrate and explain the effect of the increase in real GDP on the demand function and the quantity of real money balances people hold. Exerciso 9.4 Today it costs $1.25Cdn to buy $1US. Suppose tomorrow US interest rates rise. What would happen to the foreign exchange rate between Canadian and US dollars?I Explain why. Exercise 9.5 (a) Draw a diagram to illustrate equilibrium in the money market. (b) Starting from your initial equilibrium, suppose real national income (Y) increased. Illustrate and explain how the money market would adjust to this change in economic conditions. (c) How does the interest rate in the new equilibrium compare with the interest rate in the initial equilibrium? Exercises for Chapter 9 I 23? Exercise 9.6 Construct a set of diagrams that shows the monetary transmission mechanism linking interest rates to aggregate demand and output. Using these diagrams, show and explain: (a) How a reduction in the money supply would affect aggregate demand and output. (b) Alternatively, how an increase in the precautionary demand for money balances caused by terrorist activity, or severe weather events, or an increase in uncertainty in general would affect aggregate demand and output. Assume the money supply is held constant. (c) Alternatively, how would an increase in autonomous investment expenditure and exports affect aggregate demand, output, and interest rates