Intermediate Macroeconomic Theory II
Economics 105B
Take-Home Final Examination
中级宏观经济理论代写 Part I. (106 points)1.[ 8 POINTS]Gross National Product (GNP) is higher than Gross Domestic Product (GDP) for a macroeconomy.
Instructions
1.You have 180 minutes to complete the exam.
2.There are 200 points in total for the exam. Answer all of them.
3.There will be no communication of any form with your teaching assistants or me during the examination period. If you believe a question contains an error or an ambiguity, say so on your answer sheets; then make an attempt to correct the alleged error or to resolve the ambiguity, and answer the question as well as you can.
4.On the first page of your answer sheets, please (i) print your full name and student ID number; and (ii) write down the following statement on academic integrity: “I [your full name] hereby certify that the answers below are prepared solely by me, without any assistance or consultation from someone else. [your signature]” Please note that 5 points will be deducted if you do not write down the above statement.
Part I. (106 points) 中级宏观经济理论代写
1.[ 8 points]
Gross National Product (GNP) is higher than Gross Domestic Product (GDP) for a macroeconomy. Indicate whether you consider the above statement to be true, false or uncertain, and then explain your answers. Note: you will get a grade of “0” if there is no explanation in your answers.
2.[16 points]
An economy has two firms. Households own all of the labor services and all of the capital, which they rent out to the firms. Firm A produces sugar using labor services worth $10 and capital services worth $20. It sells $15 worth of sugar to households and $25 of sugar to firm B; a bakery. The bakery produces cakes worth $50 that it sells directly to households. Households earn $20 in wages from firm A and B combined. Based on the above information,
(a) [ 4 points] What is the value of GDP in this economy? Show your work.
(b) [ 4 points] What is the value added by firm A? Show your work.
(c) [ 4 points] What is the value added by firm B? Show your work.
(d) [ 4 points] How much does the household earn in profit from firms A and B combined? Show your work.
3.[20 points] 中级宏观经济理论代写
(a) [12 points] Starting with the national income identity for an open economy, derive the equation that describes the relationship between private saving, private investment, government budget surplus and net exports. Note: you need to precisely define each notation that you introduce to your answers.
(b) [ 8 points] Based on your answers to part (a), why a country with a lower budget deficit tends to increase its trade surplus? Explain your answers.
4.[24 points]
The following data refers to the economy of Econoland. Data are expressed in percentage deviations from trend.
5.[12 points]
Suppose that you believe, in a fixed exchange rate system, that the pound is about to be devalued against the deutschmark. Using the concept of the interest rate parity, will the interest rate differential between England (the home country) and Germany increase or decrease? Explain your answers. Note: start your answers by defining in words what is precisely meant by the “interest rate parity”?
6.[26 points]
Suppose that in 2020, the government runs a primary budget deficit of 2% of GDP, the nominal interest rate is equal to 5% per year and GDP grows at 3% per year.
(a) [ 8 points] Starting with the government budget equation, derive the steady-state debt to GDP ratio. Show your work.
(b) [ 6 points] Is this steady state stable or unstable? Explain your answers.
(c) [ 6 points] Explain the difference between the primary deficit and the reported deficit.
(d) [ 6 points] Assume that in 2020, the government had a debt to GDP ratio of 25%. How big was the reported deficit to GDP ratio? Show your work.
Part II. (54 points) 中级宏观经济理论代写
Consider a Cassical economy in which the representative household’s utility function is given by U=1 /3log(C)+2/3log(1-L) , where C is consumption, L is labor shours and (1-L) is leisure. Suppose that he can transform his labor time into the produced good using the technology Y=9L, and all produced output is consumed. Suppose that this is a market economy and that there are many individuals each with these preferences and technologies.
Let ω be the real wage.
1.[ 6 points] Find the labor demand function. Show your work.
2.[ 6 points] What is the value of profits made by each firm? Show your work.
3.[12 points] Find the labor supply function. Show your work.
4.[12 points] Derive the equilibrium (a) real wage, (b) employment, and (c) output. Show your work.
Suppose that each individual uses money in exchange. Let the supply of money equal $1,500, and suppose that the propensity to hold money is equal to 2.
5.[ 6 points] Derive the price level for this economy in equilibrium. Show your work.
6.[ 6 points] Derive the equilibrium nominal wage denoted by WE . Show your work.
7.[ 6 points] Suppose that the economy is in equilibrium at the full-employment level of employment, but the value of the money stock incresaes from $1,500 to $2,000. If the price level remains unchanged at its previous level as in Question 5, what is the new level of output? Show your work.
Part III. (40 points) 中级宏观经济理论代写
1.[12 points] What happened to (a) GDP, (b) nominal wage, (c) price, and (d) real wage during the Great Depression, in particular, were they above or below their respective trends?
2.[12 points] Based on your answers to Questioin 1, why is the Great Depression difficult to explain using the Classical theory? Illustrate your answers using the Classical aggregate demand and supply diagram. Explain your answers.
3.[16 points] Based on your answers to Questioin 1, why is the Great Depression consistent with the New-Keynesian theory of aggregate supply? Illustrate your answers using the New-Keynesian labor market and the aggregate demand-aggregate supply diagrams. Explain your answers.
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