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Plot the difference between real GDP and potential real GDP, as measured by the Congressional Budget Office. What could this difference measure?
Plot the federal funds rate, and the difference between the unemployment rate and the natural rate of unemployment (Congressional Budget Office measure).
Determine how this affects consumption plus government spending in the present and the future, and the current account surplus. Explain your results.
Which advice should the government take if its goal is to reduce the current account deficit? Explain.
Determine the collateral constraint for the consumer, and show the consumer's lifetime budget constraint in a diagram.
Show how the limited commitment problem puts a limit on how much the government can spend in the current and future periods.
What are two sources of credit market imperfections? Explain how a default premium can arise, and what would cause it to increase.
Suppose that we interpret p'K as the firm's stock price. If p'K increases, what effect does this have on the firm's optimal investment schedule?
Determine which tax policy would be more effective in accomplishing the government's goal of increasing current investment expenditures.
Can social security work to improve welfare for everyone under these conditions? Use diagrams to answer this question.
Determine the interest rate on loans made by banks. How will the interest rate change if each borrower has more collateral?
What is the effect of the social security program on consumers born in periods T + 1 and later? How does this depend on real interest rate and the population?
Are consumers better off or worse off than they would have been with pay-as-you-go? Explain using diagrams.
Choose at least three of these measures, and compare and contrast what they tell us about the boom and bust in the housing market that occurred after 2000.
In particular, are there any regularities associated with recessions, and the most recent (2008-2009) recession? Discuss what these regularities suggest.
Plot a credit card loan interest rate, and an automobile loan interest rate, and compare the two.
What are three factors that determine current labor supply? What determines the current demand for labor?
What is the goal of representative firm in real intertemporal model? What rule does representative firm follow in determining its optimal level of investment?
How is optimal investment affected by an increase in future total factor productivity? How credit market uncertainty affects investment decision of the firm.
What are the factors that shift the output demand curve? How are aggregate output and the real interest rate determined in competitive equilibrium?
What are the effects of a decrease in the current capital stock on the real interest rate, aggregate output, employment, real wage, consumption, and investment?
Determine the equilibrium effects of an anticipated increase in future total factor productivity in the real intertemporal model.
How do credit market frictions affect aggregate economic activity? Explain how tax policy can mitigate credit market frictions.
List five monetary policy rules. What happens when monetary policy is subject to the zero lower bound?
Explain how money can be nonneutral in the short run. How can monetary policy act to improve matters in the Friedman-Lucas money surprise model?