Reference no: EM13151284 , Length: 1237 words

1.Name 5 stylized facts about the business cycle.
2. Rank order these three ideas from "most optimistic about how a temporary tax raises consumer spending" to "least optimistic" about the same, and explain. 
Ricardian equivalence
Keynesian consumption function
Friedman's PIH
3. Why do New Monetarists think Open Market Purchases of bonds might reduce GDP? Why do New Keynesians and (monetarists) thinks such OMPs probably increase GDP?
4.In the US, does inflation usually rise after the economy is booming or does it fall? Do prices usually rise when the economy is booming or do prices fall?
5. In an overlapping generations world, why is population growth so important?
6. Did the price level rise or fall in the US from 1929 to 1932? If prices are flexible, what does an exogenous rise in money demand do to the price level?
7. Suppose M/P=kY. k rises from 0.1 to 0.2, ceteris paribus, and prices are flexible. M and Y are exogenous, as in the quantity theory. What precisely happens to the price level, and what is k in accurate plain language?
8.Consider the optimal labor supply of this worker in a one-period world:
Utility = U = (C to the power of 1-a)/(1-a) - bN
And production in linear in labor: Y = C = zN
As usual, a>0, as are b and z. 
a. What is the marginal disutility of labor in this utility function? Give a precise answer, 
not a philosophical statement. i.e., treat this as a math problem. 
b. If b rises, does this person like working more or like working less as a result? 
c. What is the optimal labor supply as a function of b, z, and a? 
d. For what values of a is dN*/dz >0? For what values of a is dN*/dZ<0? 
e. In normal microeconomic language, does a larger value for a make the substitution 
effect stronger or weaker? 
f. In normal microeconomic language, what's happening to the utility of consumption a a 
rises?