Assignment
Part A 1
1. Describe three ways we can use macroeconomic analysis, with one original example for each way.
2. You are running a small yard maintenance business for the summer. What do you expect to happen to the number of yards you can maintain in a day as you add workers if you don't purchase more capital equipment (like mowers and leaf blowers)? Provide at least two supporting facts to support your response.
Part B 1
1. Using the real business cycle theory, explain two effects of an adverse technological shock on the labor market and on the output market.
2. Suppose you were interested in increasing technological progress in your country. Suggest two ways to do this.
Part A 2
1. Why is the money multiplier in the United States smaller than the inverse of the required reserve ratio? Provide one reason.
2. Explain why depositing cash into a checking account does not change the money supply. Provide one supporting fact.
3. Explain why the money supply does not change when one individual writes a check to another. Provide one supporting fact.
Part B 2
1. Describe one reason why the flexibility of wages and prices tend to favor the Keynesian economic view in the short run and one reason why the flexibility of wages and prices tend to favor the classical economic view in the long run.
2. Refer the figure below and explain what happens in each graph (A, B, and C) when an economy is moving from a recession (point a) back to full employment.