Homework 6


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Homework 6 1 answer below » Can you please assist me with these questions. I do want to pay for this assignment and NOT use this towards my free assignment. Document Preview: Hiranya K Nath
ECON 5300
Fall 2015
Homework Assignment # 6
(Due by 11:59 p.m. on Tuesday, December 1)
Instructions: Answer the first two questions. Q.3 is OPTIONAL and for 2 bonus points. If you need some help with your overall score, please answer it. Your answers should be precise and complete. Please label the diagrams clearly and show all View complete question » Can you please assist me with these questions. I do want to pay for this assignment and NOT use this towards my free assignment. Document Preview: Hiranya K Nath
ECON 5300
Fall 2015
Homework Assignment # 6
(Due by 11:59 p.m. on Tuesday, December 1)
Instructions: Answer the first two questions. Q.3 is OPTIONAL and for 2 bonus points. If you need some help with your overall score, please answer it. Your answers should be precise and complete. Please label the diagrams clearly and show all your work to receive full credit. Upload your answers to the Attach File area of Homework Assignment 6. The assignment will be graded on a scale of 0-8 points. The maximum points for each question are in bracket.
1. Suppose that in 2013 the money supply was $100 billion and real GDP was $300 billion. In 2014, money supply increased by 10 percent and real GDP increased by 5 percent. Nominal GDP in
2014 was $660 billion. (4 points)
i) What was the price level in 2014? What was the velocity of money in 2014?
ii) Suppose that velocity was constant. What was the price level in 2013? What was the inflation rate in 2014?
2. Use AD-AS diagrams to explain the short-run and long-run effects of each of the following events on output and the price level. Assume that policymakers take no action. (4 points)
a) A severe hurricane damages factories along the east coast
b) The federal government decides to increase defense spending
Bonus Question (4 points)
3. In 1939, with the U.S. economy not yet fully recovered from the Great Depression, President Roosevelt proclaimed that Thanksgiving would fall a week earlier than usual so that the shopping period before Christmas would be longer. Explain what President Roosevelt might have been trying to achieve, using the model of aggregate demand and aggregate supply. Draw diagrams to explain. (2 points)
HAPPY THANKSGIVING!
1 Attachments: ECON5300-Home….docx View less » Dec 02 2015 12:18 AM

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