Homework Answers
1) Nominal national income measures the national income at current yea prices with no adjustments made for the rate of inflation over the years
For example if the nominal income in current year is $20000 and will rise by 10% in the next year then the the nominal income in the next year will be $22000.
Real national income measures the national income at the constant or base year prices and so it is adjusted for the rate of inflation.Here,the volume of output is measured at a base year price and so the real value of the output is measured without the effect of rise in prices due to inflation.
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1. What is the difference between "nominal" and "real" national income? 2. Explain the "business cycle"...
Chapter 10 - The Business Cycle True / False Questions 26. Macroeconomics focuses on individual firms...
Chapter 10 - The Business Cycle True / False Questions 26. Macroeconomics focuses on individual firms and industries. 27. Macroeconomics is the study of the economy as a whole. 28. A basic purpose of macroeconomics is to explain monopoly behavior. 29. The business cycle is the alternating periods of economic growth and contraction 30. The basic measures of macroeconomic performance include the national debt, the trade deficit, and interest rates, 31. An important measure of macroeconomic performance is the growth...
(i) Explain the difference between the nominal and real interest rate. (ii) How does the Reserve...
(i) Explain the difference between the nominal and real interest rate. (ii) How does the Reserve Bank of Australia control the interest rate? (iii) You hear a news report that output growth and inflation are lower than expected. How do you expect that report to affect market interest rates? Explain why. (iv) The Reserve Bank faces a large recessionary gap. How would you expect it to respond? Explain step by step how its policy change is likely to affect the...
Question 2 (a) Explain the difference between nominal exchange rate and real exchange rate (6) As mentioned in clas...
Question 2 (a) Explain the difference between nominal exchange rate and real exchange rate (6) As mentioned in class, the Big Mac Index is a numerical tool for assessing disparities in consumer purchasing power between countries. Suppose that the Big Mac costs 7.50 Canadian dollars in Canada and 5.50 US dollars in the US. Suppose that the nominal exchange rate is 1.2 Canadian dollars to 1 US dollar. (i) Calculate the real exchange rate. (ii) Is the Canadian dollar undervalued...
b) (2 points) What is the difference between nominal interest rate and real interest rate? Does...
b) (2 points) What is the difference between nominal interest rate and real interest rate? Does the central bank control the real or the nominal rate? What do we assume in our model? Financial Frictions in the short run model a) (2 points) What do you expect would happen to the economy when spreads increase? Specifically, what would happen to output and inflation during the period of the increase in spreads? b) (2 points) How do you think would the...
1. If real GDP equals nominal GDP, then: A. the growth in output was greater than...
1. If real GDP equals nominal GDP, then: A. the growth in output was greater than the growth in the price level. B. there was no inflation. C. the current year is the base year. D. output did not grow. E. the growth in output was equal to the growth in the price level. 2. Nominal GDP is GDP measured in: A.base prices. B.fixed prices. C. current prices. D. marginal prices. E. average prices. 3. When you include discouraged workers...
Question 1 Outline the difference between " real business cycle model " and " new classical...
Question 1 Outline the difference between " real business cycle model " and " new classical model " in examining the relatioship between money and output in the short run. (10 marks) Explain the early Keynesian's structure model evidence and explain why monetarist objected to Early Keynesian's findings. (9 marks)
6. Explain the difference between "real" and "nominal" effects concerning monetary policy and its effect on...
6. Explain the difference between "real" and "nominal" effects concerning monetary policy and its effect on the economy.
1,3 and the second part of 4 i dont understand pinay, dinini 1. Contrast the economic...
1,3 and the second part of 4 i dont understand
pinay, dinini 1. Contrast the economic growth and business cycles. 2. What are the three primary measures used in macroeconomics to assess the performance of an economy? Real GDP: Provides an overall indicator of output or production in the economy Unemployment: Measures the degree to which labor resources are being fully used Inflation: The increase of prices in the economy 3. The three major indicators of the health and development...
In your own words, what is the difference between "real GDP growth" and "nominal GDP growth"...
In your own words, what is the difference between "real GDP growth" and "nominal GDP growth" and why do we care?
3. (1 point) The U.S. economy is subject to the forces of the business cycle. However, real GDP has increased over...
3. (1 point) The U.S. economy is subject to the forces of the business cycle. However, real GDP has increased over time. Explain why this is true. 4. (1 point) If you go to the grocery store and see that your favorite cereal is $3.00 more expensive, does this mean that there is inflation in the economy? Why or why not?
Chapter 10 - The Business Cycle True / False Questions 26. Macroeconomics focuses on individual firms and industries. 27. Macroeconomics is the study of the economy as a whole. 28. A basic purpose of macroeconomics is to explain monopoly behavior. 29. The business cycle is the alternating periods of economic growth and contraction 30. The basic measures of macroeconomic performance include the national debt, the trade deficit, and interest rates, 31. An important measure of macroeconomic performance is the growth...
Question 2 (a) Explain the difference between nominal exchange rate and real exchange rate (6) As mentioned in class, the Big Mac Index is a numerical tool for assessing disparities in consumer purchasing power between countries. Suppose that the Big Mac costs 7.50 Canadian dollars in Canada and 5.50 US dollars in the US. Suppose that the nominal exchange rate is 1.2 Canadian dollars to 1 US dollar. (i) Calculate the real exchange rate. (ii) Is the Canadian dollar undervalued...
b) (2 points) What is the difference between nominal interest rate and real interest rate? Does the central bank control the real or the nominal rate? What do we assume in our model? Financial Frictions in the short run model a) (2 points) What do you expect would happen to the economy when spreads increase? Specifically, what would happen to output and inflation during the period of the increase in spreads? b) (2 points) How do you think would the...
6. Explain the difference between "real" and "nominal" effects concerning monetary policy and its effect on the economy.
1,3 and the second part of 4 i dont understand
pinay, dinini 1. Contrast the economic growth and business cycles. 2. What are the three primary measures used in macroeconomics to assess the performance of an economy? Real GDP: Provides an overall indicator of output or production in the economy Unemployment: Measures the degree to which labor resources are being fully used Inflation: The increase of prices in the economy 3. The three major indicators of the health and development...
3. (1 point) The U.S. economy is subject to the forces of the business cycle. However, real GDP has increased over time. Explain why this is true. 4. (1 point) If you go to the grocery store and see that your favorite cereal is $3.00 more expensive, does this mean that there is inflation in the economy? Why or why not?
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