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Problem 5 (12 pts) You are given the following information: Bank deposits (D) 350 Currency-to-deposits ratio (c)_0.20 Required reserve ratio (rr) 0.15 a) [2 pts] Solve for the monetary base level (B) in this economy. b) [2 pts] Solve for the level of bank reserves (R) in this economy. c) [2 pts] Solve for the money supply level (M) in this economy. d) [3 pts] Suppose there is a sudden rise in the currency-to-deposits ratio, from the original level of 0.2 to a new level of 0.4. If everything else remains unchanged, find the level of monetary base needed to keep money supply fixed at the level you solved for in part c. e) [3 pts] Continue to consider c=0.4. Find the level of required reserve ratio needed to keep the monetary base and the money supply fixed at the level you solved or in parts a and c, respectively.d) [3 pts] Solve for the change in net exports that would bring the equilibrium output level in the economy with the income tax to the level of Y*we that you found in part b. Specify both the magnitude of the change and whether it is an increase or a decrease. What would be the new level of net exports after this change? e) [4 pts] Suppose that we would like to achieve the same goal (as in part d) by changing the level of autonomous taxes instead of that of net exports. So, net exports remain at 50 and the level of autonomous taxes changes instead. Find the necessary magnitude of the change and specify whether autonomous taxes would have to increase or decrease. What would be the new level of autonomous taxes that accomplishes this goal?ii) (2 pts) Suppose the Federation no longer requires Neverland to have a minimum GDP of 6,000 in order to host the World Cup, and instead it lets Neverland host the World Cup in 2014. How does your answer compare to part i), i.e., would Neverland be able to attain a GDP of 20,000 earlier, later or at the same time as in part i)? Problem 4 (15 pts) You are given data on the following variables in an economy: Government spending 300 Planned investment 200 Net exports 50 Autonomous taxes 250 Income tax rate 0.1 Marginal propensity to consume 0.5 a) [2 pts] Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonomous consumption. b) [4 pts] Solve for the equilibrium level of output in the following two scenarios: i) there is an income tax t=0.1, ii) there is no income tax in the economy. Denote these two variables by Y" w and Y" wo respectively. c) [2 pts] In the economy with an income tax of 10%, what is the budget balance of the government?Problem 3 (10 pts) You have the following information on 3 countries: Soccerland, Handeggland and Neverland Soccerland Handeggland Neverland GDP in the beginning 5000 1000 2000 of 2013 Growth rate per year 5% 8% 10% a) [1 pt] How long will it take until Soccerland's GDP increases by 75%? b) [2 pts] How long will it take until Soccerland and Handeggland have the same GDP? c) [2 pts] Soccerland's population is not happy that, eventually, Handeggland is going to have higher GDP than their country. They feel that they are a much better country, so they are going to work harder to ensure that Handeggland will never catch up with Soccerland. If Soccerland new growth rate is constant every year, what is the minimum growth rate that ensures that Soccerland will always have a higher GDP than Handeggland? d) [5 pts] Neverland's ambition is to host the World Cup. At the beginning of 2013, its GDP was 2,000 and it was growing at 10% a year. Moreover, it will keep this pace until it hosts the World Cup. In order to host such a big event, Neverland's GDP must be at least 6,000. After the moment it reaches that GDP level, it will host the World Cup in the beginning of the next year available for the event (remember that the World Cup takes place every four years, in the years: 2014, 2018, 2022, etc.) During the year that Neverland hosts the World Cup, their GDP will grow at 75%. Then, everything returns to normal, and their GDP will keep growing at 10% a year forever onwards. i) (3 pts) When will Neverland's GDP reach 20,000?b) [3 pts] What would your answer for the question in part a be if the growth rate from 2019 and on was in fact -1%? Explain your reasoning carefully. c) [2 pts] Consider now the more optimistic scenario in which the economy does not slow down and the current growth rate of 5% remains constant in the coming years. How long will it take for the GDP level to double in this scenario? Express your answer in two forms: i) in number of years, ii) as a fraction of your answer in part a.f) [8 pts] For this part, assume that nothing changed with respect to the population, i.e., those who were working kept their jobs and those who were looking for jobs kept looking for jobs. Choose between (increase/decreaseot change) A) A baby is born. i) Unemployment Rate will. ii) Labor Force Participation Rate will iii) Employment-Population Ratio will B) John, 35 years old, was discouraged by the poor job opportunities, so he was not working and not looking for a job. One day, his cousin called him offering a job which he took. i) Unemployment Rate will ii) Labor Force Participation Rate will iii) Employment-Population Ratio will C) After 50 years of hard work, Mark, 70 years old, retires. i) Unemployment Rate will ii) Labor Force Participation Rate will Problem 2 (10 pts) Consider Country X with a GDP level of 210,000 and a growth rate of 5% in 2013 (calculated at the end of year 2013). The experts predict that the growth of the economy of Country X will gradually slow down in the coming years. More precisely, they foresee the following growth rates for the future: 2013 -2016 5% 2016 - 2019 3% 2019 - on 1% Hint: The list above should be read as saying that, for instance, 'the growth rate from the end of 2013 until the end of 2016 will be 5%, then from the end of 2016 until the end of 2019 it will be 3%' and so on. a) [5 pts] Assuming that the predictions of the experts listed above are accurate, when in the future will Country X's GDP double compared to the GDP level of 2013?Problem 1 (13 pts) Age Don't have a Don't have a Have a full Have a part job but are job and are Total time job time job looking for not looking one for one 70 50 40 30 170 290 Total 520 270 335 675 1800 a) [1 pt] What is the size of the labor force in this economy? b) [1 pt] Calculate the Labor Force Participation Rate for this economy. Report as a percentage to two decimal places. c) [1 pt] Calculate the Unemployment Rate for this economy. Report as a percentage to two decimal places. d) [1 pt] Calculate the Employment Population Ratio for this economy. Report as a percentage to two decimal places. e) [1 pt] What is the Unemployment Rate for people aged 21-50? Report as a percentage to two decimal places