Question 4 Match each description with the correct key term.

Which of the following changes (or "shocks") could create a more positive output gap in an economy? - Government spending increases. - There is a reduction in taxes. - The risk premium increases. - The default rates on loans falls.

In the IS-MP framework, the impact of an increase in the risk premium in the economy is that the

Unemployment will rise when: O the output gap is positive. O there is excess demand. O inflation falls below the level of expected inflation. O the output gap is equal to zero.

In preparation for your Portfolio Project, spend some time reflecting on, and then writing a short paper about, the differences between the long run and the short run in macroeconomics. In your paper, address the following: • Describe the factors that affect long-run economic growth • Apply these factors in an AS/AD framework • Describe the mechanisms through which monetary policy and fiscal policy affect the economy • Apply these factors in an AS/AD framework • Discuss the tradeoff between affecting the economy in the short run and in the long run. • Based on Chapters 12, 13, 20, 21, & 22 in Principles of macroeconomics by N. Gregory Mankiw

You have saved $8,000 toward the purchase of a car costing $11,000. How long will the $8,000 have to be invested at 8% compounded monthly to grow to $11,000?

Assume three Solow economies without technological progress and pro- duction function Y = √K-L. Each economy starts with capital per worker equal 9. Population growth equals 4% and savings rate equals 30% in each economy. Economies differ only in the depreciation rate: in country A it equals 1%, in country B it equals 2%, and in country C it equals 6%-

Task 2, part A Students analyze the tourists' demand of the selected country (outbound travel from the selected country, seen as a source market); the research is not limited to economic factors but must include some economic dimension. Task 2, part B A table presenting the country's trade balance of international travel (inbound expenditures (=receipts) minus outbound expenditures) must be created and included in this section; its trend must be related to the economic situation of the country and discussed. This task is limited to international tourism and does not consider domestic travel. Minimum 3 years must be presented in the table. Even though different sources provide data of international tourism receipts and expenditures, students are required to use the official database of the UNWTO compendium, made available for this purpose. As 2020 was an exceptional year because of Covid, the groups can choose whether to include 2020 in their analysis or to limit the analysis to 2019 as the most recent date.

You are an economic adviser using the Fed model to analyze the economy. As a result of a fall in consumer spending, you'd predict that the real interest rate will ________real GDP will ______ will be ________

JUse that the Phillips curve is given by T₁ = π₁ + (m+z) – aut, πt where is the inflation rate, is the expected inflation rate, m is the markup of prices over wages, z is a catch-all variable, and ut of wage flexibility - the higher is a, the greater is the response of the wage to a change in the the unemployment rate. We can think of a as a measure unemployment rate, aut. 1. Suppose m = = 0.03 and z = 0.003. What is the natural rate of unemployment if a = 1? If a = 2? What is the relation between a and the natural rate of unemployment? Explain in words.