*Write every dollar answer with the correct sign: + or [All the percentage answers are positive, so do not use a sign for these] * Write your dollar answers with the $ sign. [All answers are in billions of dollars so do not write this out.] [No commas - hint: there is no answer greater than +$999.9, nor less than -$999.9.] *Write your W with % sign. * Write your answer expressed to the number of decimal places given in each problem. Examples of W: +$45.6 3.2% -$72.7 Examples of W: $45.6 +3.2% -$72.7 billion in 4i r2l11bn r I i For #1-#3, the monetary transmission mechanism is as follows: The money multiplier is 4.3 The interest rate will change by 1% for each $70 billion change in the money supply. The level of investment will change by $40 billion for each 1.5% change in interest rates. The level of income will change by $9.2 billion for each $3 billion change in investment. [Be sure to note when changes are in the same direction and when they are in opposite directions] 1. What will be the ghgngg in inggmg if the Fed buys $33 billion worth of bonds? [Express to one decimal place] 2. What will be the ghgngg in inggmg if the Fed sells $18 billion worth of bonds? [Express to one decimal place] 3. The FOMC has decided to target an increase in income of $250 billion. To do this what must be the WW5? [Use a \"+" for purchases and a \"-\" for sales in your answer. Express to one decimal place] For #4#7, the monetary transmission mechanism is as follows: The money multiplier is 2.75 The interest rate will change by 1.25% for each $30 billion change in the money supply. The level of investment will change by $28 billion for each 2% change in interest rates. The level of income will change by $3.2 billion for each $1.5 billion change in investment. 4. What will be the ehenge in ingeme if the Fed buys $50 billion worth of bonds? [Express to one decimal place] 5. What will be the ehenge in ingeme if the Fed sells $12 billion worth of bonds? [Express to one decimal place] 6. We will introduce a new wrinkle to this problem. Suppose the unemployment rate is 4.9% and that for every change in income of $150 billion this rate will change by 0.20%. [For example, if the level of income rose by $150 billion, then the unemployment rate would fall to 4.7%.] What will be the new enempleyment age if the Fed buys $125 billion worth of bonds? [Express to two decimal places.] 7- The FOMC has decided to target the unemployment rate at 3.85%. To do this what must be the | V | n h I ? [Use a \"+" for purchases and a \"-\" for sales in your answer. Express to one decimal place] For #8-#9, the monetary transmission mechanism is as follows: The money multiplier is 3.2 The interest rate will change by 2.5% for each $100 billion change in the money supply. The level of investment will change by $25 billion for each 1% change in interest rates. The level of income will change by $8 billion for each $2.7 billion change in investment. The level of unemployment is 4.9% and will change by 0.2% for each $150 billion change In Income. And, now one more wrinkle to our story - the level of inflation is 6.5% and will change by 0.25% for each $70 billion change in income greater than an initial change of $100 billion. [For example, if income falls by $80 billion, there would be no change in ination, because the change was less than $100 billion. But, if income falls by $156 billion, then ination would fall by 0.2% to 6.3%, because $56 billion is 80% of $70 and 80% of .25% is .20%.] 8. What will be the new inatien re if the Fed sold $32 billion worth of bonds? [Express to two decimal places] 9. The FOMC has decided to target the ination rate at 5.5%. To do this what must be the I v I f n r h I ? [Use a \"+" for purchases and a \"-\" for sales in your answer. Express to one decimal place]