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Principles of Macroeconomics: Exam Questions Essay

Monroe College Instructor: Carlo Augusta Student name : James Demesnes Macroeconomics l. Current event questions Take home test 2 a. Summarize the history (creation) of the Central Bank of the US Re: The First Bank of the United States was founded after the revolutionary war in 1795 – 1797 . The United States was in debts cause by the War. Therefore, President Alexander Hamilton advised of the bank to handle the colossal war debt and also create some kind of currency. B.

Give the full name of and time in office for the current chairman of the Federal Reserve Bank and his predecessor Re: Since February 3, 2014, Janet Yelled is the current chairperson for Federal Reserve Bank and her predecessor is Ben S. Brenan. II. Theoretical questions 1. Define macroeconomics and explain its roots Re:(A) Macroeconomics is study of a country’s larger economic issues, such as how firms compete, the effects of government policies, and how an economy maintains and allocates its scarce resources.

Re:(B) As the world economy has experienced a range of perplexity , such as mass unemployment rate during the Great depression f the sass, rapid inflation in the sass and other recessions in the early sass through

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sass. As a result many economists have analyze them and somehow came up with an solution called macroeconomics. Which study the over whole the behavior of an economic system. 2. State and explain the three different macroeconomics policies Re(A): The three different macroeconomics policies are: Economic Growth, Low Unemployment and Low inflation. B) Economic Growth is the increase of the total physical output of the final goods and services of an economy. C) Low unemployment occur when the natural rate is a below due to some changes in the economy . (D)Low inflation is decrease in the overall price level. 3. Explain the three different market arenas Re(A) Goods and Services Market is when the household seller , the government and outsiders buy goods and services from firms. (B) Labor market is when firms and the government purchase labor from households. (C)Money Market or financial markets is when households ,other firms and outsiders purchase stocks and bonds from firms.

Output market in other hand is where finished goods are traded 4. Discuss the trends and cycles of the US economy Principles of Macroeconomics: Exam Questions By Jadedness 5 Define GAP, explain its two types , and discuss its limitations Re:The total output measured by the market value of all final amount of goods and services produced by an economy during a given period of time, usually a year. (B) Nominal GAP is when the value of goods and services are articulated in current prices 6. Define unemployment and discuss the different types of unemployment Ill.

Practicum questions 1. Let the price of Barbarous (the Haitian Rum) be $15 a bottle in 2000 and $25 in 2010, and its production 5000 and 7500 bottles respectively for the two years. Let the price of a bag of rice be $20 in 2000 and $35 in 2010, when its production is 10000 and 25000 bags for the same two years. Let the price of a bag of beans be $30 in 2000 and $40 in 2010, when its production is 8000 and 20000 bags of the two years respectively. Using the year 2000 as the base year, compute: a. The Nominal GAP for both years b. The real GAP for both year .

The Implicit Price Deflator for GAP for both years d. The ICP for both years. 2. Suppose that the economy of an island H is described by the following equations: GAP (Y) = 8000, government expenditures (G) = 600, Taxes (T) = 1000, Consumption (C) = 400 + 3/4 (Y-T), and investment (I) = 800 – err a. Write the equation of the GAP b. Compute 1. Private saving 2. Public saving 3. National saving 4. Equilibrium interest rate 5. What can you conclude about the economy of Island H (in term of type of budget and type of economy? ) Explain why.

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