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What is the primary defining feature of business cycles? Besides persistence, what are three important features of the deviations from trend in GDP?
Plot this variable, and comment on how it has evolved over time, particularly during the last recession.
Calculate 12-month percentage rates of increase in each of these measures from 2000 up to the present, compare, and discuss.
Determine: the participation rate; the labor force; the number of employed workers; and the employment/population ratio.
Why do the statistics indicate that there might be some large measurement error in the official U.S. national income accounts.
Let Kt denote the quantity of capital a country has at the beginning. Calculate the quantity of capital at the beginning of years 0, 1, 2, 3, 4, ... , 10.
Calculate the Private disposable income, Transfers from the government to the private sector, Gross national product, Net exports and Gross domestic product.
Calculate the 12-month percentage increase in the consumer price index (CPI), and plot this, along with the unemployment rate.
Calculate consumption of durables, consumption of nondurables, and consumption of services as percentages of total consumption, and plot these time series.
What effect does the income tax have on consumption and labor supply? Explain your results in terms of income and substitution effects.
Given perfect substitutes, is more preferred to less? Do preferences satisfy the diminishing marginal rate of substitution property?
Suppose that w = 0.75, p = 0.8, and T = 6. Determine the consumer's optimal choice of consumption and leisure, and show this in a diagram.
Using diagrams, determine the effects of this tax change on the consumer, and explain your results in terms of income and substitution effects.
Determine the effects on consumption and labor supply, and explain your results in terms of income and substitution effects.
Draw the consumer's budget constraint, and show his or her optimal choice of consumption and leisure.
Show that the consumer is better off with a lump-sum tax rather than a proportional tax on wage income (as in question 3) given that either tax yields.
Determine the effects of the day care program on consumption, leisure, and hours worked for the consumer.
Referring to the 10-year historical period 1955-1965 discuss an example of a change in autonomous spending. Discuss the multiplier effect it had on the economy.
Find the optimal consumption in each period. What financial transactions does the consumer make?
Show diagrammatically how an individual earning income in period 1 can provide for consumption in period 2.
However, in September 2008, the Fed and the Treasury let Lehman Brothers go bankrupt. What accounts for the different decisions?
Explain how a collapse in house prices might lead to a recession. Explain how a collapse of economy's credit-granting mechanisms might lead to a recession.
What factors do you think bankers normally use to distinguish prime borrowers from subprime borrowers?
What are some of the typical challenges project described in one of the feature boxes in this chapter (for example, the What Went Right?
Suppose there are two types of jobs in the labor market: safe jobs and risky jobs. Describe how the worker decides whether to accept a safe job?