Start Discovering Solved Questions and Your Course Assignments
TextBooks Included
Active Tutors
Asked Questions
Answered Questions
What countries in the world have flexible exchange rates? Which have fixed exchange rates? Does it hold in the long run? Why or why not?
Plot the current account surplus and net exports. How much difference is there between the two time series? Comment on the significance of this.
Is the asset a long-maturity asset or a shortmaturity asset? Is the asset high risk or low risk? Explain why the asset has the above four properties.
How would we modify the Friedman rule in the context of a New Keynesian sticky price model like the one, assuming that monetary policy is the only policy.
What does this imply for the Friedman rule, that is, how should the central bank conduct monetary policy optimally? Discuss.
How would the Friedman rule for monetary policy be altered under these circumstances?
If the nominal interest rate on money is the same as the nominal interest rate on bonds, determine the effects in the model, illustrating this in a diagram.
How can bank runs be prevented? Explain what moral hazard is and why and how deposit insurance and the too-big-to-fail doctrine induce a moral hazard problem.
Why are there two equilibria in the Diamond-Dybvig banking model? How do the two equilibria compare?
What are the four defining characteristics of a financial intermediary? What are three types of financial intermediaries?
Why don't real-world central banks follow the Friedman rule? List four properties of assets, and explain why these properties are important.
How does an absence of double coincidence of wants make money socially useful?
What are five forms that money has taken historically? What is different about these two forms of money?
Under a flexible exchange rate, what are the equilibrium effects? Should economic policy respond to the change in future productivity? If so, how?
Suppose that capital controls take the form of a total ban on capital inflows. Carefully explain how and why your results differ in the two cases.
There is also a liquidity trap at the world level, in that r* = 0. Is there anything that economic policy can do to close the output gap? If so, what? Explain.
In the Diamond-Dybvig banking model, suppose that the banking contract. Why will there still be a bank run equilibrium? Carefully explain why or why not.
Determine a consumer's lifetime budget constraint when there is no bank, show this in a diagram, and determine the consumer's optimal consumption.
Plot the monetary base (M0) along with your choice of price index (consumer price index, implicit GDP deflator, for example).
What should the central bank do in response, given its goal? What are the effects on aggregate variables? Explain.
When there is deficient financial liquidity, what happens if the central bank conducts an open market purchase?
Determine the equilibrium effects of this. Could business cycles be explained by fluctuations in G?
Show that temporary shocks to government spending of this type could lead to business cycles that are consistent with the key business cycle facts.
If waves of optimism and pessimism of this sort cause GDP to fluctuate, does the model explain the key business cycle facts?
What components on the asset side of the Fed's balance sheet were responsible for the increase in the reserve balances that began in late 2008.