- Employment Data Civilian Non Military And Non Institutionalized Over 16 Types Of Unemployment Structural 3 Friction 1 (88.66 KiB) Viewed 12 times
1.
A) The gap (Hint: actual v. potential) thatthe economy is experiencing is a _____________ gap.
B) What is the Debt to GDP ratio in %?_________
C) What is the present tax multiplier(Hint-use formula for a number)? _____
2.
A) The central bankers (FED) now enter youroffice. What recommendations do you make to
them toclose the gap? (Include all tools of monetary policy discussed inclass.)
B) What is the money multiplier (Number-showcalculation) __________________________
C) What is the present inflation rate assumedby the central bankers (see data) ______
3.
The Classical economists have explained their position to youregarding their approach to this economy
A) What time frame are theyreferencing? ____________________
B) What is their expectation of pricesmovements to changes in the economy, based on the above time
Frame(Hint: price response in the market)?
C) What actions do these economistsrecommend to you to correct the gap?
4.
Next, the Keynesians enter your office and explain theirposition and tools. A) They want to use government spending.What is the government multiplier (number)?
Show work! _____
B) What amount of change (in $) wouldit take to close the gap using tax policy changes? Showcalculation!
C) How would this policy impact theAggregate demand/supply graph (what shifts and what direction?)
Employment data (Civilian-non-military and non-institutionalized, over 16) Types of unemployment; Structural 3% Frictional 5% Population (available for work): 110 million Full time workers 70 million Part-time workers by own choice 10 million Part time workers due to economic deficiencies 7 million Discouraged worker 5 million Unemployed 11 million Inflation CPI 5.3% PCE=5.4% GDP deflator 124 PPI 110 Central Bank Reserve requirement (rr) = 3% Discount rate = 3% Fed rate = 2% Domestic Economy Present (actual) Real Gross Domestic Product (GDP) = $18 trillion Potential output (GDP) - $21 trillion Marginal propensity to consume (MPC) = 0.9 National debt = $24 trillion Foreign currency exchange: $1.05 US dollars = 1 foreign dollar