中级宏观经济学 第六版 (曼昆 著) worth publishers 课后答案 181页

'课后答案网您最真诚的朋友www.hackshp.cn网团队竭诚为学生服务，免费提供各门课后答案，不用积分，甚至不用注册，旨在为广大学生提供自主学习的平台！课后答案网：www.hackshp.cn视频教程网：www.efanjy.comPPT课件网：www.ppthouse.com课后答案网www.hackshp.cn AnswerstoTextbookQuestionsandProblemskhdaw.com课后答案网www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER1TheScienceofMacroeconomicsQuestionsforReview1.Microeconomicsisthestudyofhowindividualfirmsandhouseholdsmakedecisions,andhowtheyinteractwithoneanother.Microeconomicmodelsoffirmsandhouseholdsarebasedonprinciplesofoptimization—firmsandhouseholdsdothebesttheycangiventheconstraintstheyface.Forexample,householdschoosewhichgoodstopur-chaseinordertomaximizetheirutility,whereasfirmsdecidehowmuchtoproduceinordertomaximizeprofits.Incontrast,macroeconomicsisthestudyoftheeconomyasawhole;itfocusesonissuessuchashowtotaloutput,totalemployment,andtheoverallpricelevelaredetermined.Theseeconomy-widevariablesarebasedontheinteractionofmanyhouseholdsandmanyfirms;therefore,microeconomicsformsthebasisformacroeconomics.khdaw.com2.Economistsbuildmodelsasameansofsummarizingtherelationshipsamongeconomicvariables.Modelsareusefulbecausetheyabstractfromthemanydetailsintheecono-myandallowonetofocusonthemostimportanteconomicconnections.3.Amarket-clearingmodelisoneinwhichpricesadjusttoequilibratesupplyanddemand.Market-clearingmodelsareusefulinsituationswherepricesareflexible.Yetinmanysituations,flexiblepricesmaynotbearealisticassumption.Forexample,laborcontractsoftensetwagesforuptothreeyears.Or,firmssuchasmagazinepub-lisherschangetheirpricesonlyeverythreetofouryears.Mostmacroeconomistsbelievethatpriceflexibilityisareasonableassumptionforstudyinglong-runissues.Overthelongrun,pricesrespondtochangesindemandorsupply,eventhoughintheshortruntheymaybeslowtoadjust.ProblemsandApplications1.Themanyrecentmacroeconomicissuesthathavebeeninthenewslately(early2002)课后答案网includetherecessionthatbeganinMarch2001,sharpreductionsintheFederalReserve’stargetinterestrate(theso-calledFederalFundsrate)in2001,whetherthegovernmentshouldimplementtaxcutsorspendingincreasestostimulatetheeconomy,www.hackshp.cnandafinancialcrisisinArgentina.2.Manyphilosophersofsciencebelievethatthedefiningcharacteristicofascienceistheuseofthescientificmethodofinquirytoestablishstablerelationships.Scientistsexam-inedata,oftenprovidedbycontrolledexperiments,tosupportordisproveahypothesis.Economistsaremorelimitedintheiruseofexperiments.Theycannotconductcon-trolledexperimentsontheeconomy;theymustrelyonthenaturalcourseofdevelop-mentsintheeconomytocollectdata.Totheextentthateconomistsusethescientificmethodofinquiry,thatis,developinghypothesesandtestingthem,economicshasthecharacteristicsofascience.3.Wecanuseasimplevariantofthesupply-and-demandmodelforpizzatoanswerthisquestion.Assumethatthequantityoficecreamdemandeddependsnotonlyonthepriceoficecreamandincome,butalsoonthepriceoffrozenyogurt:dQ=D(PIC,PFY,Y).Weexpectthatdemandforicecreamriseswhenthepriceoffrozenyogurtrises,becauseicecreamandfrozenyogurtaresubstitutes.Thatis,whenthepriceoffrozenyogurtgoesup,Iconsumelessofitand,instead,fulfillmoreofmyfrozendesserturgesthroughtheconsumptionoficecream.khdaw.com3若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 4Chapter1TheScienceofMacroeconomicssThenextpartofthemodelisthesupplyfunctionforicecream,Q=S(PIC).sdFinally,inequilibrium,supplymustequaldemand,sothatQ=Q.YandPFYaretheexogenousvariables,andQandPICaretheendogenousvariables.Figure1–1usesthismodeltoshowthatafallinthepriceoffrozenyogurtresultsinaninwardshiftofthedemandcurveforicecream.Thenewequilibriumhasalowerpriceandquantityoficecream.Figure1–1PICSkhdaw.comPriceoficecreamD2D1QQuantityoficecream4.Thepriceofhaircutschangesratherinfrequently.Fromcasualobservation,hairstyliststendtochargethesamepriceoveraone-ortwo-yearperiodirrespectiveofthedemandforhaircutsorthesupplyofcutters.Amarket-clearingmodelforanalyzingthemarketforhaircutshastheunrealisticassumptionofflexibleprices.Suchanassumptionisunrealisticintheshortrunwhenweobservethatpricesareinflexible.Overthelongrun,however,thepriceofhaircutsdoestendtoadjust;amarket-clearingmodelisthereforeappropriate.课后答案网www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER2TheDataofMacroeconomicsQuestionsforReview1.GDPmeasuresboththetotalincomeofeveryoneintheeconomyandthetotalexpendi-tureontheeconomy’soutputofgoodsandservices.GDPcanmeasuretwothingsatoncebecausebotharereallythesamething:foraneconomyasawhole,incomemustequalexpenditure.Asthecircularflowdiagraminthetextillustrates,thesearealter-native,equivalentwaysofmeasuringtheflowofdollarsintheeconomy.2.Theconsumerpriceindexmeasurestheoveralllevelofpricesintheeconomy.Ittellsusthepriceofafixedbasketofgoodsrelativetothepriceofthesamebasketinthebaseyear.3.TheBureauofLaborStatisticsclassifieseachpersonintooneofthefollowingthreecat-khdaw.comegories:employed,unemployed,ornotinthelaborforce.Theunemploymentrate,whichisthepercentageofthelaborforcethatisunemployed,iscomputedasfollows:NumberofUnemployed×100UnemploymentRate=.LaborForceNotethatthelaborforceisthenumberofpeopleemployedplusthenumberofpeopleunemployed.4.Okun’slawreferstothenegativerelationshipthatexistsbetweenunemploymentandrealGDP.Employedworkershelpproducegoodsandserviceswhereasunemployedworkersdonot.IncreasesintheunemploymentratearethereforeassociatedwithdecreasesinrealGDP.Okun’slawcanbesummarizedbytheequation:%∆RealGDP=3%–2×(∆UnemploymentRate).Thatis,ifunemploymentdoesnotchange,thegrowthrateofrealGDPis3percent.Foreverypercentage-pointchangeinunemployment(forexample,afallfrom6percentto5percent,oranincreasefrom6percentto7percent),outputchangesby2percentinthe课后答案网oppositedirection.www.hackshp.cnProblemsandApplications1.Alargenumberofeconomicstatisticsarereleasedregularly.Theseincludethefollow-ing:GrossDomesticProduct—themarketvalueofallfinalgoodsandservicesproducedinayear.TheUnemploymentRate—thepercentageofthecivilianlaborforcewhodonothaveajob.CorporateProfits—theaccountingprofitsremainingaftertaxesofallmanufacturingcorporations.Itgivesanindicationofthegeneralfinancialhealthofthecorporatesec-tor.TheConsumerPriceIndex(CPI)—ameasureoftheaveragepricethatconsumerspayforthegoodstheybuy;changesintheCPIareameasureofinflation.TheTradeBalance—thedifferencebetweenthevalueofgoodsexportedabroadandthevalueofgoodsimportedfromabroad.khdaw.com5若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 6AnswerstoTextbookQuestionsandProblems2.Valueaddedbyeachpersonisthevalueofthegoodproducedminustheamountthepersonpaidforthematerialsnecessarytomakethegood.Therefore,thevalueaddedbythefarmeris$1.00($1–0=$1).Thevalueaddedbythemilleris$2:shesellstheflourtothebakerfor$3butpaid$1fortheflour.Thevalueaddedbythebakeris$3:shesellsthebreadtotheengineerfor$6butpaidthemiller$3fortheflour.GDPisthetotalvalueadded,or$1+$2+$3=$6.NotethatGDPequalsthevalueofthefinalgood(thebread).3.Whenawomanmarriesherbutler,GDPfallsbytheamountofthebutler’ssalary.Thishappensbecausemeasuredtotalincome,andthereforemeasuredGDP,fallsbytheamountofthebutler’slossinsalary.IfGDPtrulymeasuredthevalueofallgoodsandservices,thenthemarriagewouldnotaffectGDPsincethetotalamountofeconomicactivityisunchanged.ActualGDP,however,isanimperfectmeasureofeconomicactiv-itybecausethevalueofsomegoodsandservicesisleftout.Oncethebutler’sworkbecomespartofhishouseholdchores,hisservicesarenolongercountedinGDP.Asthisexampleillustrates,GDPdoesnotincludethevalueofanyoutputproducedinthehome.Similarly,GDPdoesnotincludeothergoodsandservices,suchastheimputedkhdaw.comrentondurablegoods(e.g.,carsandrefrigerators)andanyillegaltrade.4.a.governmentpurchasesb.investmentc.netexportsd.consumptione.investment5.Dataonparts(a)to(g)canbedownloadedfromtheBureauofEconomicAnalysis(www.bea.doc.gov—followthelinkstoGDPandrelateddata).Mostofthedata(notnecessarilytheearliestyear)canalsobefoundintheEconomicReportofthePresident.Bydividingeachcomponent(a)to(g)bynominalGDPandmultiplyingby100,weobtainthefollowingpercentages:195019752000a.Personalconsumptionexpenditures65.5%63.0%68.2%b.Grossprivatedomesticinvestment课后答案网18.4%14.1%17.9%c.Governmentconsumptionpurchases15.9%22.1%17.6%d.Netexports0.2%0.8%–3.7%e.Nationaldefensepurchaseswww.hackshp.cn6.7%6.6%3.8%f.Stateandlocalpurchases7.1%12.8%11.7%g.Imports3.9%7.5%14.9%(Note:ThesedataweredownloadedFebruary5,2002fromtheBEAwebsite.)Amongotherthings,weobservethefollowingtrendsintheeconomyovertheperiod1950–2000:(a)Personalconsumptionexpenditureshavebeenaroundtwo-thirdsofGDP,althoughtheshareincreasedabout5percentagepointsbetween1975and2000.(b)TheshareofGDPgoingtogrossprivatedomesticinvestmentfellfrom1950to1975butthenrebounded.(c)Thesharegoingtogovernmentconsumptionpurchasesrosemorethan6percentagepointsfrom1950to1975buthasrecededsomewhatsincethen.(d)Netexports,whichwerepositivein1950and1975,weresubstantiallynegativein2000.(e)Thesharegoingtonationaldefensepurchasesfellfrom1975to2000.(f)Thesharegoingtostateandlocalpurchasesrosefrom1950to1975.khdaw.com(g)ImportshavegrownrapidlyrelativetoGDP.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter2TheDataofMacroeconomics76.a.i.NominalGDPisthetotalvalueofgoodsandservicesmeasuredatcurrentprices.Therefore,NominalGDP=(P2000×Q2000)+(P2000×Q2000)2000carscarsbreadbread=($50,000×100)+($10×500,000)=$5,000,000+$5,000,000=$10,000,000.2010201020102010NominalGDP2010=(Pcars×Qcars)+(Pbread×Qbread)=($60,000×120)+($20×400,000)=$7,200,000+$8,000,000=$15,200,000.ii.RealGDPisthetotalvalueofgoodsandservicesmeasuredatconstantprices.Therefore,tocalculaterealGDPin2010(withbaseyear2000),multi-plythequantitiespurchasedintheyear2010bythe2000prices:RealGDP=(P2000×Q2010)+(P2000×Q2010)2010carscarsbreadbreadkhdaw.com=($50,000×120)+($10×400,000)=$6,000,000+$4,000,000=$10,000,000.RealGDPfor2000iscalculatedbymultiplyingthequantitiesin2000bythepricesin2000.Sincethebaseyearis2000,realGDP2000equalsnominalGDP2000,whichis$10,000,000.Hence,realGDPstayedthesamebetween2000and2010.iii.TheimplicitpricedeflatorforGDPcomparesthecurrentpricesofallgoodsandservicesproducedtothepricesofthesamegoodsandservicesinabaseyear.Itiscalculatedasfollows:NominalGDP2010ImplicitPriceDeflator2010=.RealGDP2010UsingthevaluesforNominalGDP2010andrealGDP2010calculatedabove:$15,200,000课后答案网ImplicitPriceDeflator2010=$10,000,000www.hackshp.cn=1.52.Thiscalculationrevealsthatpricesofthegoodsproducedintheyear2010increasedby52percentcomparedtothepricesthatthegoodsintheeconomysoldforin2000.(Because2000isthebaseyear,thevaluefortheimplicitpricedeflatorfortheyear2000is1.0becausenominalandrealGDParethesameforthebaseyear.)iv.Theconsumerpriceindex(CPI)measuresthelevelofpricesintheeconomy.TheCPIiscalledafixed-weightindexbecauseitusesafixedbasketofgoodsovertimetoweightprices.Ifthebaseyearis2000,theCPIin2010isanaverageofpricesin2010,butweightedbythecompositionofgoodsproducedin2000.TheCPI2010iscalculatedasfollows:2010200020102000()PQPQ×+×()CPI=carscarsbreadbread20102000200020002000(PQ×)(+×PQ)carscaarsbreadbread($60,000×100)+($20×500,000)=($50,000×100)+($10×500,000)$16,000,000=$10,000,000khdaw.com=1.6.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 8AnswerstoTextbookQuestionsandProblemsThiscalculationshowsthatthepriceofgoodspurchasedin2010increasedby60percentcomparedtothepricesthesegoodswouldhavesoldforin2000.TheCPIfor2000,thebaseyear,equals1.0.b.TheimplicitpricedeflatorisaPaascheindexbecauseitiscomputedwithachang-ingbasketofgoods;theCPIisaLaspeyresindexbecauseitiscomputedwithafixedbasketofgoods.From(5.a.iii),theimplicitpricedeflatorfortheyear2010is1.52,whichindicatesthatpricesroseby52percentfromwhattheywereintheyear2000.From(5.a.iv.),theCPIfortheyear2010is1.6,whichindicatesthatpricesroseby60percentfromwhattheywereintheyear2000.Ifpricesofallgoodsroseby,say,50percent,thenonecouldsayunam-biguouslythatthepricelevelroseby50percent.Yet,inourexample,relativepriceshavechanged.Thepriceofcarsroseby20percent;thepriceofbreadroseby100percent,makingbreadrelativelymoreexpensive.AsthediscrepancybetweentheCPIandtheimplicitpricedeflatorillus-trates,thechangeinthepriceleveldependsonhowthegoods’pricesareweight-ed.TheCPIweightsthepriceofgoodsbythequantitiespurchasedintheyearkhdaw.com2000.Theimplicitpricedeflatorweightsthepriceofgoodsbythequantitiespur-chasedintheyear2010.Thequantityofbreadconsumedwashigherin2000thanin2010,sotheCPIplacesahigherweightonbread.Sincethepriceofbreadincreasedrelativelymorethanthepriceofcars,theCPIshowsalargerincreaseinthepricelevel.c.Thereisnoclear-cutanswertothisquestion.Ideally,onewantsameasureofthepricelevelthataccuratelycapturesthecostofliving.Asagoodbecomesrelativelymoreexpensive,peoplebuylessofitandmoreofothergoods.Inthisexample,consumersboughtlessbreadandmorecars.Anindexwithfixedweights,suchastheCPI,overestimatesthechangeinthecostoflivingbecauseitdoesnottakeintoaccountthatpeoplecansubstitutelessexpensivegoodsfortheonesthatbecomemoreexpensive.Ontheotherhand,anindexwithchangingweights,suchastheGDPdeflator,underestimatesthechangeinthecostoflivingbecauseitdoesnottakeintoaccountthattheseinducedsubstitutionsmakepeoplelesswelloff.7.a.Theconsumerpriceindexusestheconsumptionbundleinyear1tofigureouthow课后答案网muchweighttoputonthepriceofagivengood:2121()PQPQ×+×()redredgreengreen2www.hackshp.cnCPI=()PQPQ11×+×(11)redredgreengreeen($2×10)+($1×0)=($1×10)+($2×0)=2.AccordingtotheCPI,priceshavedoubled.b.Nominalspendingisthetotalvalueofoutputproducedineachyear.Inyear1andyear2,Abbybuys10applesfor$1each,sohernominalspendingremainscon-stantat$10.Forexample,2222NominalSpending2=(Pred×Qred)+(Pgreen×Qgreen)=($2×0)+($1×10)=$10.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter2TheDataofMacroeconomics9c.Realspendingisthetotalvalueofoutputproducedineachyearvaluedatthepricesprevailinginyear1.Inyear1,thebaseyear,herrealspendingequalshernominalspendingof$10.Inyear2,sheconsumes10greenapplesthatareeachvaluedattheiryear1priceof$2,soherrealspendingis$20.Thatis,1212RealSpending2=(Pred×Qred)+(Pgreen×Qgreen)=($1×0)+($2×10)=$20.Hence,Abby’srealspendingrisesfrom$10to$20.d.TheimplicitpricedeflatoriscalculatedbydividingAbby’snominalspendinginyear2byherrealspendingthatyear:NominalSpending2ImplicitPriceDeflator2=RealSpending2$10khdaw.com=$20=0.5.Thus,theimplicitpricedeflatorsuggeststhatpriceshavefallenbyhalf.Therea-sonforthisisthatthedeflatorestimateshowmuchAbbyvaluesherapplesusingpricesprevailinginyear1.Fromthisperspectivegreenapplesappearveryvalu-able.Inyear2,whenAbbyconsumes10greenapples,itappearsthathercon-sumptionhasincreasedbecausethedeflatorvaluesgreenapplesmorehighlythanredapples.Theonlywayshecouldstillbespending$10onahigherconsumptionbundleisifthepriceofthegoodshewasconsumingfeel.e.IfAbbythinksofredapplesandgreenapplesasperfectsubstitutes,thenthecostoflivinginthiseconomyhasnotchanged—ineitheryearitcosts$10toconsume10apples.AccordingtotheCPI,however,thecostoflivinghasdoubled.ThisisbecausetheCPIonlytakesintoaccountthefactthattheredapplepricehasdou-bled;theCPIignoresthefallinthepriceofgreenapplesbecausetheywerenotin课后答案网theconsumptionbundleinyear1.IncontrasttotheCPI,theimplicitpricedefla-torestimatesthecostoflivinghashalved.Thus,theCPI,aLaspeyresindex,over-statestheincreaseinthecostoflivingandthedeflator,aPaascheindex,under-www.hackshp.cnstatesit.ThischapterofthetextdiscussesthedifferencebetweenLaspeyresandPaascheindicesinmoredetail.8.a.RealGDPfallsbecauseDisneydoesnotproduceanyserviceswhileitisclosed.Thiscorrespondstoadecreaseineconomicwell-beingbecausetheincomeofwork-ersandshareholdersofDisneyfalls(theincomesideofthenationalaccounts),andpeople’sconsumptionofDisneyfalls(theexpendituresideofthenationalaccounts).b.RealGDPrisesbecausetheoriginalcapitalandlaborinfarmproductionnowpro-ducemorewheat.Thiscorrespondstoanincreaseintheeconomicwell-beingofsociety,sincepeoplecannowconsumemorewheat.(Ifpeopledonotwanttocon-sumemorewheat,thenfarmersandfarmlandcanbeshiftedtoproducingothergoodsthatsocietyvalues.)c.RealGDPfallsbecausewithfewerworkersonthejob,firmsproduceless.Thisaccuratelyreflectsafallineconomicwell-being.d.RealGDPfallsbecausethefirmsthatlayoffworkersproduceless.Thisdecreaseseconomicwell-beingbecauseworkers’incomesfall(theincomeside),andtherearefewergoodsforpeopletobuy(theexpenditureside).e.RealGDPislikelytofall,asfirmsshifttowardproductionmethodsthatproducekhdaw.comfewergoodsbutemitlesspollution.Economicwell-being,however,mayrise.Theeconomynowproduceslessmeasuredoutputbutmorecleanair;cleanairisnot若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 10AnswerstoTextbookQuestionsandProblemstradedinmarketsand,thus,doesnotshowupinmeasuredGDP,butisneverthe-lessagoodthatpeoplevalue.f.RealGDPrisesbecausethehigh-schoolstudentsgofromanactivityinwhichtheyarenotproducingmarketgoodsandservicestooneinwhichtheyare.Economicwell-being,however,maydecrease.Inidealnationalaccounts,attendingschoolwouldshowupasinvestmentbecauseitpresumablyincreasesthefutureproduc-tivityoftheworker.Actualnationalaccountsdonotmeasurethistypeofinvest-ment.NotealsothatfutureGDPmaybelowerthanitwouldbeifthestudentsstayedinschool,sincethefutureworkforcewillbelesseducated.g.MeasuredrealGDPfallsbecausefathersspendlesstimeproducingmarketgoodsandservices.Theactualproductionofgoodsandservicesneednothavefallen,however.Measuredproduction(whatthefathersarepaidtodo)falls,butunmea-suredproductionofchild-rearingservicesrises.9.AsSenatorRobertKennedypointedout,GDPisanimperfectmeasureofeconomicper-formanceorwell-being.Inadditiontotheleft-outitemsthatKennedycited,GDPalsoignorestheimputedrentondurablegoodssuchascars,refrigerators,andlawnmowers;khdaw.commanyservicesandproductsproducedaspartofhouseholdactivity,suchascookingandcleaning;andthevalueofgoodsproducedandsoldinillegalactivities,suchasthedrugtrade.TheseimperfectionsinthemeasurementofGDPdonotnecessarilyreduceitsusefulness.Aslongasthesemeasurementproblemsstayconstantovertime,thenGDPisusefulincomparingeconomicactivityfromyeartoyear.Moreover,alargeGDPallowsustoaffordbettermedicalcareforourchildren,newerbooksfortheireducation,andmoretoysfortheirplay.课后答案网www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER3NationalIncome:WhereItComesFromandWhereItGoesQuestionsforReview1.Factorsofproductionandtheproductiontechnologydeterminetheamountofoutputaneconomycanproduce.Factorsofproductionaretheinputsusedtoproducegoodsandservices:themostimportantfactorsarecapitalandlabor.Theproductiontechnologydetermineshowmuchoutputcanbeproducedfromanygivenamountsoftheseinputs.Anincreaseinoneofthefactorsofproductionoranimprovementintechnologyleadstoanincreaseintheeconomy’soutput.2.Whenafirmdecideshowmuchofafactorofproductiontohire,itconsidershowthisdecisionaffectsprofits.Forexample,hiringanextraunitoflaborincreasesoutputandkhdaw.comthereforeincreasesrevenue;thefirmcomparesthisadditionalrevenuetotheaddition-alcostfromthehigherwagebill.Theadditionalrevenuethefirmreceivesdependsonthemarginalproductoflabor(MPL)andthepriceofthegoodproduced(P).Anaddi-tionalunitoflaborproducesMPLunitsofadditionaloutput,whichsellsforPdollars.Therefore,theadditionalrevenuetothefirmisP×MPL.Thecostofhiringtheaddi-tionalunitoflaboristhewageW.Thus,thishiringdecisionhasthefollowingeffectonprofits:∆Profit=∆Revenue–∆Cost=(P×MPL)–W.Iftheadditionalrevenue,P×MPL,exceedsthecost(W)ofhiringtheadditionalunitoflabor,thenprofitincreases.Thefirmwillhirelaboruntilitisnolongerprofitabletodoso—thatis,untiltheMPLfallstothepointwherethechangeinprofitiszero.Intheequationabove,thefirmhireslaboruntil∆profit=0,whichiswhen(P×MPL)=W.Thisconditioncanberewrittenas:课后答案网MPL=W/P.Therefore,acompetitiveprofit-maximizingfirmhireslaboruntilthemarginalproductoflaborequalstherealwage.Thesamelogicappliestothefirm’sdecisiontohirecapi-tal:thefirmwillhirecapitaluntilthemarginalproductofcapitalequalstherealrentalwww.hackshp.cnprice.3.Aproductionfunctionhasconstantreturnstoscaleifanequalpercentageincreaseinallfactorsofproductioncausesanincreaseinoutputofthesamepercentage.Forexam-ple,ifafirmincreasesitsuseofcapitalandlaborby50percent,andoutputincreasesby50percent,thentheproductionfunctionhasconstantreturnstoscale.Iftheproductionfunctionhasconstantreturnstoscale,thentotalincome(orequivalently,totaloutput)inaneconomyofcompetitiveprofit-maximizingfirmsisdividedbetweenthereturntolabor,MPL×L,andthereturntocapital,MPK×K.Thatis,underconstantreturnstoscale,economicprofitiszero.4.Consumptiondependspositivelyondisposableincome—theamountofincomeafteralltaxeshavebeenpaid.Thehigherdisposableincomeis,thegreaterconsumptionis.Thequantityofinvestmentgoodsdemandeddependsnegativelyontherealinter-estrate.Foraninvestmenttobeprofitable,itsreturnmustbegreaterthanitscost.Becausetherealinterestratemeasuresthecostoffunds,ahigherrealinterestratemakesitmorecostlytoinvest,sothedemandforinvestmentgoodsfalls.5.Governmentpurchasesarethosegoodsandservicespurchaseddirectlybythegovern-ment.Forexample,thegovernmentbuysmissilesandtanks,buildsroads,andprovideskhdaw.com11若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 12AnswerstoTextbookQuestionsandProblemsservicessuchasairtrafficcontrol.AlloftheseactivitiesarepartofGDP.Transferpay-mentsaregovernmentpaymentstoindividualsthatarenotinexchangeforgoodsorservices.Theyaretheoppositeoftaxes:taxesreducehouseholddisposableincome,whereastransferpaymentsincreaseit.ExamplesoftransferpaymentsincludeSocialSecuritypaymentstotheelderly,unemploymentinsurance,andveterans’benefits.6.Consumption,investment,andgovernmentpurchasesdeterminedemandfortheecono-my’soutput,whereasthefactorsofproductionandtheproductionfunctiondeterminethesupplyofoutput.Therealinterestrateadjuststoensurethatthedemandfortheeconomy’sgoodsequalsthesupply.Attheequilibriuminterestrate,thedemandforgoodsandservicesequalsthesupply.7.Whenthegovernmentincreasestaxes,disposableincomefalls,andthereforeconsump-tionfallsaswell.Thedecreaseinconsumptionequalstheamountthattaxesincreasemultipliedbythemarginalpropensitytoconsume(MPC).ThehighertheMPCis,thegreateristhenegativeeffectofthetaxincreaseonconsumption.Becauseoutputisfixedbythefactorsofproductionandtheproductiontechnology,andgovernmentpur-chaseshavenotchanged,thedecreaseinconsumptionmustbeoffsetbyanincreaseinkhdaw.cominvestment.Forinvestmenttorise,therealinterestratemustfall.Therefore,ataxincreaseleadstoadecreaseinconsumption,anincreaseininvestment,andafallintherealinterestrate.ProblemsandApplications1.a.Accordingtotheneoclassicaltheoryofdistribution,therealwageequalsthemar-ginalproductoflabor.Becauseofdiminishingreturnstolabor,anincreaseinthelaborforcecausesthemarginalproductoflabortofall.Hence,therealwagefalls.b.Therealrentalpriceequalsthemarginalproductofcapital.Ifanearthquakedestroyssomeofthecapitalstock(yetmiraculouslydoesnotkillanyoneandlowerthelaborforce),themarginalproductofcapitalrisesand,hence,therealrentalpricerises.c.Ifatechnologicaladvanceimprovestheproductionfunction,thisislikelyto课后答案网increasethemarginalproductsofbothcapitalandlabor.Hence,therealwageandtherealrentalpricebothincrease.2.Aproductionfunctionhasdecreasingreturnstoscaleifanequalpercentageincreaseinwww.hackshp.cnallfactorsofproductionleadstoasmallerpercentageincreaseinoutput.Forexample,ifwedoubletheamountsofcapitalandlabor,andoutputlessthandoubles,thentheproductionfunctionhasdecreasingreturnstocapitalandlabor.Thismayhappenifthereisafixedfactorsuchaslandintheproductionfunction,andthisfixedfactorbecomesscarceastheeconomygrowslarger.Aproductionfunctionhasincreasingreturnstoscaleifanequalpercentageincreaseinallfactorsofproductionleadstoalargerpercentageincreaseinoutput.Forexample,ifdoublinginputsofcapitalandlabormorethandoublesoutput,thenthepro-ductionfunctionhasincreasingreturnstoscale.Thismayhappenifspecializationoflaborbecomesgreateraspopulationgrows.Forexample,ifoneworkerbuildsacar,thenittakeshimalongtimebecausehehastolearnmanydifferentskills,andhemustconstantlychangetasksandtools;allofthisisfairlyslow.Butifmanyworkersbuildacar,theneachonecanspecializeinaparticulartaskandbecomeveryfastatit.3.a.Accordingtotheneoclassicaltheory,technicalprogressthatincreasesthemargin-alproductoffarmerscausestheirrealwagetorise.b.Therealwagein(a)ismeasuredintermsoffarmgoods.Thatis,ifthenominalwageisindollars,thentherealwageisW/PF,wherePFisthedollarpriceoffarmgoods.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter3NationalIncome:WhereItComesFromandWhereItGoes13c.Ifthemarginalproductivityofbarbersisunchanged,thentheirrealwageisunchanged.d.Therealwagein(c)ismeasuredintermsofhaircuts.Thatis,ifthenominalwageisindollars,thentherealwageisW/PH,wherePHisthedollarpriceofahair-cut.e.Ifworkerscanmovefreelybetweenbeingfarmersandbeingbarbers,thentheymustbepaidthesamewageWineachsector.f.IfthenominalwageWisthesameinbothsectors,buttherealwageintermsoffarmgoodsisgreaterthantherealwageintermsofhaircuts,thenthepriceofhaircutsmusthaverisenrelativetothepriceoffarmgoods.g.Bothgroupsbenefitfromtechnologicalprogressinfarming.4.Theeffectofagovernmenttaxincreaseof$100billionon(a)publicsaving,(b)privatesaving,and(c)nationalsavingcanbeanalyzedbyusingthefollowingrelationships:NationalSaving=[PrivateSaving]+[PublicSaving]=[Y–T–C(Y–T)]+[T–G]khdaw.com=Y–C(Y–T)–G.a.PublicSaving—Thetaxincreasecausesa1-for-1increaseinpublicsaving.Tincreasesby$100billionand,therefore,publicsavingincreasesby$100billion.b.PrivateSaving—Theincreaseintaxesdecreasesdisposableincome,Y–T,by$100billion.Sincethemarginalpropensitytoconsume(MPC)is0.6,consumptionfallsby0.6×$100billion,or$60billion.Hence,∆PrivateSaving=–$100b–0.6(–$100b)=–$40b.Privatesavingfalls$40billion.c.NationalSaving—Becausenationalsavingisthesumofprivateandpublicsav-ing,wecanconcludethatthe$100billiontaxincreaseleadstoa$60billionincreaseinnationalsaving.Anotherwaytoseethisisbyusingthethirdequationfornationalsavingexpressedabove,thatnationalsavingequalsY–C(Y–T)–G.The$100billiontaxincreasereducesdisposableincomeandcausesconsumptiontofallby$60bil-lion.SinceneitherGnorYchanges,nationalsavingthusrisesby$60billion.d.Inves课后答案网tment—Todeterminetheeffectofthetaxincreaseoninvestment,recallthenationalaccountsidentity:www.hackshp.cnY=C(Y–T)+I(r)+G.Rearranging,wefindY–C(Y–T)–G=I(r).Theleft-handsideofthisequationisnationalsaving,sotheequationjustsaysthenationalsavingequalsinvestment.Sincenationalsavingincreasesby$60billion,investmentmustalsoincreaseby$60billion.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 14AnswerstoTextbookQuestionsandProblemsHowdoesthisincreaseininvestmenttakeplace?Weknowthatinvestmentdependsontherealinterestrate.Forinvestmenttorise,therealinterestratemustfall.Figure3–1graphssavingandinvestmentasafunctionoftherealinter-estrate.rS1S2FiguFigure3–1re3–1r1r2Realinterestratekhdaw.comI(r)I,SInvestment,SavingThetaxincreasecausesnationalsavingtorise,sothesupplycurveforloan-ablefundsshiftstotheright.Theequilibriumrealinterestratefalls,andinvest-mentrises.5.Ifconsumersincreasetheamountthattheyconsumetoday,thenprivatesavingand,therefore,nationalsavingwillfall.Weknowthisfromthedefinitionofnationalsaving:NationalSaving=[PrivateSaving]+[PublicSaving]课后答案网=[Y–T–C(Y–T)]+[T–G].Anincreaseinconsumptiondecreasesprivatesaving,sonationalsavingfalls.Figure3–2graphssavingandinvestmentasafunctionoftherealinterestrate.Ifnationalsavingdecreases,thesupplycurveforloanablefundsshiftstotheleft,therebywww.hackshp.cnraisingtherealinterestrateandreducinginvestment.Figure3–2rS2S1Figure3–2r1Realinterestrater2I(r)khdaw.comI,SInvestment,Saving若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter3NationalIncome:WhereItComesFromandWhereItGoes156.a.Privatesavingistheamountofdisposableincome,Y–T,thatisnotconsumed:privateS=Y–T–C=5,000–1,000–(250+0.75(5,000–1,000))=750.Publicsavingistheamountoftaxesthegovernmenthasleftoverafteritmakesitspurchases:publicS=T–G=1,000–1,000=0.Totalsavingisthesumofprivatesavingandpublicsaving:privatepublicS=S+S=750+0=750.b.Theequilibriuminterestrateisthevalueofrthatclearsthemarketforloanablekhdaw.comfunds.Wealreadyknowthatnationalsavingis750,sowejustneedtosetitequaltoinvestment:S=I750=1,000–50rSolvingthisequationforr,wefind:r=5%.c.Whenthegovernmentincreasesitsspending,privatesavingremainsthesameasprivatebefore(noticethatGdoesnotappearintheSabove)whilegovernmentsavingdecreases.PuttingthenewGintotheequationsabove:privateS=750publicS=T–G=1,000–1,250课后答案网=–250.Thus,privatepublicwww.hackshp.cnS=S+S=750+(–250)=500.d.Onceagaintheequilibriuminterestrateclearsthemarketforloanablefunds:S=I500=1,000–50rSolvingthisequationforr,wefind:r=10%.7.Todeterminetheeffectoninvestmentofanequalincreaseinbothtaxesandgovern-mentspending,considerthenationalincomeaccountsidentityfornationalsaving:NationalSaving=[PrivateSaving]+[PublicSaving]=[Y–T–C(Y–T)]+[T–G].WeknowthatYisfixedbythefactorsofproduction.Wealsoknowthatthechangeinconsumptionequalsthemarginalpropensitytoconsume(MPC)timesthechangeindisposableincome.Thistellsusthat∆NationalSaving=[–∆T–(MPC×(–∆T))]+[∆T–∆G]=[–∆T+(MPC×∆khdaw.comT)]+0=(MPC–1)∆T.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 16AnswerstoTextbookQuestionsandProblemsTheaboveexpressiontellsusthattheimpactonsavingofanequalincreaseinTandGdependsonthesizeofthemarginalpropensitytoconsume.TheclosertheMPCisto1,thesmalleristhefallinsaving.Forexample,iftheMPCequals1,thenthefallinconsumptionequalstheriseingovernmentpurchases,sonationalsaving[Y–C(Y–T)–G]isunchanged.TheclosertheMPCisto0(andthereforethelargeristheamountsavedratherthanspentforaone-dollarchangeindisposableincome),thegreateristheimpactonsaving.BecauseweassumethattheMPCislessthan1,weexpectthatnationalsavingfallsinresponsetoanequalincreaseintaxesandgovern-mentspending.ThereductioninsavingmeansthatthesupplyofloanablefundscurveshiftstotheleftinFigure3–3.Therealinterestraterises,andinvestmentfalls.rS2S1FFigure3–2igure3–3khdaw.comr2r1RealinterestrateI(r)I,SInvestment,Saving8.a.Thedemandcurveforbusinessinvestmentshiftsoutbecausethesubsidyincreas-课后答案网esthenumberofprofitableinvestmentopportunitiesforanygiveninterestrate.Thedemandcurveforresidentialinvestmentremainsunchanged.www.hackshp.cnb.Thetotaldemandcurveforinvestmentintheeconomyshiftsoutsinceitrepre-sentsthesumofbusinessinvestment,whichshiftsout,andresidentialinvest-ment,whichisunchanged.AsaresulttherealinterestraterisesasinFigure3–4.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter3NationalIncome:WhereItComesFromandWhereItGoes17rFFigure3–igure34–4S1.AnincreaseBindesiredinvestment...RealinterestrateAI22....raisestheinterestrate.I1I,SInvestment,Savingkhdaw.comc.Thetotalquantityofinvestmentdoesnotchangebecauseitisconstrainedbytheinelasticsupplyofsavings.Theinvestmenttaxcreditleadstoariseinbusinessinvestment,butanoffsettingfallinresidentialinvestment.Thatis,thehigherinterestratemeansthatresidentialinvestmentfalls(ashiftalongthecurve),whereastheoutwardshiftofthebusinessinvestmentcurveleadsbusinessinvest-menttorisebyanequalamount.Figure3–5showsthischange.NotethatBRBRI+=+=IIIS1122Figure3–5rr课后答案网r2r2r1www.hackshp.cnr1IBIBIRIR1212BusinessBusinessResidentialResidentialInvestmentinvestmentInvestmentinvestment9.Inthischapter,weconcludedthatanincreaseingovernmentexpendituresreducesnationalsavingandraisestheinterestrate;itthereforecrowdsoutinvestmentbythefullamountoftheincreaseingovernmentexpenditure.Similarly,ataxcutincreasesdisposableincomeandhenceconsumption;thisincreaseinconsumptiontranslatesintoafallinnationalsaving—again,itcrowdsoutinvestment.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 18AnswerstoTextbookQuestionsandProblemsIfconsumptiondependsontheinterestrate,thentheseconclusionsaboutfiscalpolicyaremodifiedsomewhat.Ifconsumptiondependsontheinterestrate,thensodoessaving.Thehighertheinterestrate,thegreaterthereturntosaving.Hence,itseemsreasonabletothinkthatanincreaseintheinterestratemightincreasesavingandreduceconsumption.Figure3–6showssavingasanincreasingfunctionoftheinterestrate.Figure3–6rS(r)Figure3–6khdaw.comRealinterestrateSSavingConsiderwhathappenswhengovernmentpurchasesincrease.Atanygivenleveloftheinterestrate,nationalsavingfallsbythechangeingovernmentpurchases,asshowninFigure3–7.Thefigureshowsthatifthesavingfunctionslopesupward,investmentfallsbylessthantheamountthatgovernmentpurchasesrise;thishappensbecauseconsumptionfallsandsavingincreasesinresponsetothehigherinterestrate.Hence,themoreresponsiveconsumptionistotheinterestrate,thelessgovernmentpurchasescrowdoutinvestment.rS2(r)S(r)FiFigure3–gure3–77课后答案网1www.hackshp.cnr1r∆GRealinterestrateI(r)I1II,SInvestment,Savingkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter3NationalIncome:WhereItComesFromandWhereItGoes19MoreProblemsandApplicationstoChapter3α1–α1.a.ACobb–DouglasproductionfunctionhastheformY=AKL.IntheappendixweshowedthatthemarginalproductsfortheCobb–Douglasproductionfunctionare:MPL=(1–α)Y/L.MPK=αY/K.Competitiveprofit-maximizingfirmshirelaboruntilitsmarginalproductequalstherealwage,andhirecapitaluntilitsmarginalproductequalstherealrentalrate.UsingthesefactsandtheabovemarginalproductsfortheCobb–Douglasproductionfunction,wefind:W/P=MPL=(1–α)Y/L.R/P=MPK=αY/K.Rewritingthis:khdaw.com(W/P)L=MPL×L=(1–α)Y.(R/P)K=MPK×K=αY.Notethattheterms(W/P)Land(R/P)Karethewagebillandtotalreturntocapi-tal,respectively.Giventhatthevalueofα=0.3,thentheaboveformulasindicatethatlaborreceives70percentoftotaloutput,whichis(1–0.3),andcapitalreceives30percentoftotaloutput.b.Todeterminewhathappenstototaloutputwhenthelaborforceincreasesby10percent,considertheformulafortheCobb–Douglasproductionfunction:α1–αY=AKL.LetY1equaltheinitialvalueofoutputandY2equalfinaloutput.Weknowthatα=0.3.WealsoknowthatlaborLincreasesby10percent:0.30.7Y1=AKL.0.30.7课后答案网Y2=AK(1.1L).NotethatwemultipliedLby1.1toreflectthe10-percentincreaseinthelaborforce.www.hackshp.cnTocalculatethepercentagechangeinoutput,divideY2byY1:0.30.7Y2=AK(1.1L)0.30.7Y1AKL0.7=(1.1)=1.069.Thatis,outputincreasesby6.9percent.Todeterminehowtheincreaseinthelaborforceaffectstherentalpriceofcapital,considertheformulafortherealrentalpriceofcapitalR/P:α–11–αR/P=MPK=αAKL.Weknowthatα=0.3.Wealsoknowthatlabor(L)increasesby10percent.Let(R/P)1equaltheinitialvalueoftherentalpriceofcapital,and(R/P)2equalthefinalrentalpriceofcapitalafterthelaborforceincreasesby10percent.Tofind(R/P)2,multiplyLby1.1toreflectthe10-percentincreaseinthelaborforce:–0.70.7(R/P)1=0.3AKL.–0.70.7(R/P)2=0.3AKkhdaw.com(1.1L).若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 20AnswerstoTextbookQuestionsandProblemsTherentalpriceincreasesbytheratio–0.70.7(R/P)20.3AK(1.1L)=–0.70.7(R/P)10.3AKL0.7=(1.1)=1.069.Sotherentalpriceincreasesby6.9percent.Todeterminehowtheincreaseinthelaborforceaffectstherealwage,con-sidertheformulafortherealwageW/P:α–αW/P=MPL=(1–α)AKL.Weknowthatα=0.3.Wealsoknowthatlabor(L)increasesby10percent.Let(W/P)1equaltheinitialvalueoftherealwageand(W/P)2equalthefinalvalueoftherealwage.Tofind(W/P)2,multiplyLby1.1toreflectthe10-percentincreaseinthelaborforce:0.3–0.3khdaw.com(W/P)1=(1–0.3)AKL.0.3–0.3(W/P)2=(1–0.3)AK(1.1L).Tocalculatethepercentagechangeintherealwage,divide(W/P)2by(W/P)1:03..−03(W/P)(.103−)(AK11.)L2=03..−03()W/P(.103−)AKL1–0.3=(1.1)=0.972.Thatis,therealwagefallsby2.8percent.c.Wecanusethesamelogicas(b)toset0.30.7Y1=AKL.0.30.7课后答案网Y2=A(1.1K)L.Therefore,wehave:0.31.7www.hackshp.cnY2=A(1.1K)L0.30.7Y1AKL0.3=(1.1)=1.029.Thisequationshowsthatoutputincreasesby2percent.Noticethatα<0.5meansthatproportionalincreasestocapitalwillincreaseoutputbylessthanthesameproportionalincreasetolabor.Againusingthesamelogicas(b)forthechangeintherealrentalpriceofcapital:–0.70.7(R/P)20.3A(1.1K)L=–0.70.7(R/P)10.3AKL–0.7=(1.1)=0.935.Therealrentalpriceofcapitalfallsby6.5percentbecausetherearediminishingreturnstocapital;thatis,whencapitalincreases,itsmarginalproductfalls.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter3NationalIncome:WhereItComesFromandWhereItGoes21Finally,thechangeintherealwageis:–0.70.7(W/P)20.7A(1.1K)L=–0.70.7(W/P)10.7AKL0.3(1.1)=1.029.Hence,realwagesincreaseby2.9percentbecausetheaddedcapitalincreasesthemarginalproductivityoftheexistingworkers.(Noticethatthewageandoutputhavebothincreasedbythesameamount,leavingthelaborshareunchanged—afeatureofCobb–Douglastechnologies.)d.Usingthesameformula,wefindthatthechangeinoutputis:0.30.7Y2(1.1A)KL=0.30.7Y1AKL=1.1.khdaw.comThisequationshowsthatoutputincreasesby10percent.Similarly,therentalpriceofcapitalandtherealwagealsoincreaseby10percent:–0.70.7(R/P)20.3(1.1A)KL=–0.70.7(R/P)10.3AKL=1.1.0.3–0.3(W/P)20.7(1.1A)KL=0.3–0.3(W/P)10.7AKL=1.1.2.a.ThemarginalproductoflaborMPLisfoundbydifferentiatingtheproductionfunctionwithrespecttolabor:dYMPL=dL课后答案网11/31/3–2/3=KHL.3Thisequationisincreasinginhumancapitalbecausemorehumancapitalmakeswww.hackshp.cnalltheexistinglabormoreproductive.b.ThemarginalproductofhumancapitalMPHisfoundbydifferentiatingthepro-ductionfunctionwithrespecttohumancapital:dYMPH=dH11/31/3–2/3=KLH.3Thisequationisdecreasinginhumancapitalbecausetherearediminishingreturns.c.Thelaborshareofoutputistheproportionofoutputthatgoestolabor.Thetotalamountofoutputthatgoestolaboristherealwage(which,underperfectcompe-tition,equalsthemarginalproductoflabor)timesthequantityoflabor.Thisquantityisdividedbythetotalamountofoutputtocomputethelaborshare:11313-23()KHLL3LaborShare=131313KHL1=.3khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 22AnswerstoTextbookQuestionsandProblemsWecanusethesamelogictofindthehumancapitalshare:(11/31/3–2/3KLH)H3HumanCapitalShare=1/31/31/3KHL1=,3solaborgetsone-thirdoftheoutput,andhumancapitalgetsone-thirdoftheout-put.Sinceworkersowntheirhumancapital(wehope!),itwillappearthatlaborgetstwo-thirdsofoutput.d.Theratiooftheskilledwagetotheunskilledwageis:WskilledMPL+MPH=WunskilledMPL11/3–2/31/311/31/3–2/3KLH+KLH=331K1/3L–2/3H1/33Lkhdaw.com=1+.HNoticethattheratioisalwaysgreaterthan1becauseskilledworkersgetpaidmorethanunskilledworkers.Also,whenHincreasesthisratiofallsbecausethediminishingreturnstohumancapitalloweritsreturn,whileatthesametimeincreasingthemarginalproductofunskilledworkers.e.IfmorecollegescholarshipsincreaseH,thenitdoesleadtoamoreegalitariansociety.Thepolicylowersthereturnstoeducation,decreasingthegapbetweenthewagesofmoreandlesseducatedworkers.Moreimportantly,thepolicyevenraisestheabsolutewageofunskilledworkersbecausetheirmarginalproductriseswhenthenumberofskilledworkersrises.课后答案网www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER4MoneyandInflationQuestionsforReview1.Moneyhasthreefunctions:itisastoreofvalue,aunitofaccount,andamediumofexchange.Asastoreofvalue,moneyprovidesawaytotransferpurchasingpowerfromthepresenttothefuture.Asaunitofaccount,moneyprovidesthetermsinwhichpricesarequotedanddebtsarerecorded.Asamediumofexchange,moneyiswhatweusetobuygoodsandservices.2.Fiatmoneyisestablishedasmoneybythegovernmentbuthasnointrinsicvalue.Forexample,aU.S.dollarbillisfiatmoney.Commoditymoneyismoneythatisbasedonacommoditywithsomeintrinsicvalue.Gold,whenusedasmoney,isanexampleofcom-moditymoney.khdaw.com3.Inmanycountries,acentralbankcontrolsthemoneysupply.IntheUnitedStates,thecentralbankistheFederalReserve—oftencalledtheFed.Thecontrolofthemoneysupplyiscalledmonetarypolicy.TheprimarywaythattheFedcontrolsthemoneysupplyisthroughopen-marketoperations,whichinvolvethepurchaseorsaleofgovernmentbonds.Toincreasethemoneysupply,theFedusesdollarstobuygovernmentbondsfromthepublic,puttingmoredollarsintothehandsofthepublic.Todecreasethemoneysupply,theFedsellssomeofitsgovernmentbonds,takingdollarsoutofthehandsofthepublic.4.Thequantityequationisanidentitythatexpressesthelinkbetweenthenumberoftransactionsthatpeoplemakeandhowmuchmoneytheyhold.WewriteitasMoney×Velocity=Price×TransactionsM×V=P×T.Theright-handsideofthequantityequationtellsusaboutthetotalnumberoftransac-tionsthatoccurduringagivenperiodoftime,say,ayear.Trepresentsthetotalnum-beroftimesthatanytwoindividualsexchangegoodsorservicesformoney.Prepre-sentsthepriceofatypicaltransaction.Hence,theproduct课后答案网P×Trepresentsthenumberofdollarsexchangedinayear.Theleft-handsideofthequantityequationtellsusaboutthemoneyusedtomakewww.hackshp.cnthesetransactions.Mrepresentsthequantityofmoneyintheeconomy.Vrepresentsthetransactionsvelocityofmoney—therateatwhichmoneycirculatesintheeconomy.Becausethenumberoftransactionsisdifficulttomeasure,economistsusuallyuseaslightlydifferentversionofthequantityequation,inwhichthetotaloutputoftheeconomyYreplacesthenumberoftransactionsT:Money×Velocity=Price×OutputM×V=P×Y.Pnowrepresentsthepriceofoneunitofoutput,sothatP×Yisthedollarvalueofout-put—nominalGDP.Vrepresentstheincomevelocityofmoney—thenumberoftimesadollarbillbecomesapartofsomeone’sincome.5.Ifweassumethatvelocityinthequantityequationisconstant,thenwecanviewthequantityequationasatheoryofnominalGDP.Thequantityequationwithfixedveloci-tystatesthatMV=PY.IfvelocityVisconstant,thenachangeinthequantityofmoney(M)causesapropor-tionatechangeinnominalGDP(PY).Ifweassumefurtherthatoutputisfixedbythefactorsofproductionandtheproductiontechnology,thenwecanconcludethatthekhdaw.com23若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 24AnswerstoTextbookQuestionsandProblemsquantityofmoneydeterminesthepricelevel.Thisiscalledthequantitytheoryofmoney.6.Theholdersofmoneypaytheinflationtax.Aspricesrise,therealvalueofthemoneythatpeopleholdfalls—thatis,agivenamountofmoneybuysfewergoodsandservicessincepricesarehigher.7.TheFisherequationexpressestherelationshipbetweennominalandrealinterestrates.Itsaysthatthenominalinterestrateiequalstherealinterestraterplustheinflationrateπ:i=r+π.Thistellsusthatthenominalinterestratecanchangeeitherbecausetherealinterestratechangesortheinflationratechanges.Therealinterestrateisassumedtobeunaf-fectedbyinflation;asdiscussedinChapter3,itadjuststoequilibratesavingandinvestment.Thereisthusaone-to-onerelationshipbetweentheinflationrateandthenominalinterestrate:ifinflationincreasesby1percent,thenthenominalinterestratealsoincreasesby1percent.Thisone-to-onerelationshipiscalledtheFishereffect.khdaw.comIfinflationincreasesfrom6to8percent,thentheFishereffectimpliesthatthenominalinterestrateincreasesby2percentagepoints,whiletherealinterestrateremainsconstant.8.Thecostsofexpectedinflationincludethefollowing:a.Shoeleathercosts.Higherinflationmeanshighernominalinterestrates,whichmeanthatpeoplewanttoholdlowerrealmoneybalances.Ifpeopleholdlowermoneybalances,theymustmakemorefrequenttripstothebanktowithdrawmoney.Thisisinconvenient(anditcausesshoestowearoutmorequickly).b.Menucosts.Higherinflationinducesfirmstochangetheirpostedpricesmoreoften.Thismaybecostlyiftheymustreprinttheirmenusandcatalogs.c.Greatervariabilityinrelativeprices.Iffirmschangetheirpricesinfrequently,theninflationcausesgreatervariabilityinrelativeprices.Sincefree-marketeconomiesrelyonrelativepricestoallocateresourcesefficiently,inflationleadstomicroeconomicinefficiencies.d.Alteredtaxliabilities.Manyprovisionsofthetaxcodedonottakeintoaccounttheeffectofinflation.Hence,inflationcanalterindividuals’andfirms’taxliabilities,课后答案网ofteninwaysthatlawmakersdidnotintend.e.Theinconvenienceofachangingpricelevel.Itisinconvenienttoliveinaworldwithachangingpricelevel.Moneyistheyardstickwithwhichwemeasureeco-www.hackshp.cnnomictransactions.Moneyisalessusefulmeasurewhenitsvalueisalwayschanging.Thereisanadditionalcosttounexpectedinflation:f.Arbitraryredistributionsofwealth.Unexpectedinflationarbitrarilyredistributeswealthamongindividuals.Forexample,ifinflationishigherthanexpected,debtorsgainandcreditorslose.Also,peoplewithfixedpensionsarehurtbecausetheirdollarsbuyfewergoods.9.Ahyperinflationalwaysreflectsmonetarypolicy.Thatis,thepricelevelcannotgrowrapidlyunlessthesupplyofmoneyalsogrowsrapidly;andhyperinflationsdonotendunlessthegovernmentdrasticallyreducesmoneygrowth.Thisexplanation,however,begsacentralquestion:Whydoesthegovernmentstartandthenstopprintinglotsofmoney?Theansweralmostalwaysliesinfiscalpolicy:Whenthegovernmenthasalargebudgetdeficit(possiblyduetoarecentwarorsomeothermajorevent)thatitcan-notfundbyborrowing,itresortstoprintingmoneytopayitsbills.Andonlywhenthisfiscalproblemisalleviated—byreducinggovernmentspendingandcollectingmoretaxes—canthegovernmenthopetoslowitsrateofmoneygrowth.10.Arealvariableisonethatismeasuredinunitsthatareconstantovertime—forexam-khdaw.comple,theymightbemeasuredin“constantdollars.”Thatis,theunitsareadjustedfor若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter4MoneyandInflation25inflation.Anominalvariableisonethatismeasuredincurrentdollars;thevalueofthevariableisnotadjustedforinflation.Forexample,arealvariablecouldbeaHershey’scandybar;thenominalvariableisthecurrent-pricevalueoftheHershey’scandybar—5centsin1960,say,and75centsin1999.Theinterestrateyouarequotedbyyourbank—8percent,say—isanominalrate,sinceitisnotadjustedforinflation.Ifinfla-tionis,say,3percent,thentherealinterestrate,whichmeasuresyourpurchasingpower,is5percent.ProblemsandApplications1.Moneyfunctionsasastoreofvalue,amediumofexchange,andaunitofaccount.a.Acreditcardcanserveasamediumofexchangebecauseitisacceptedinexchangeforgoodsandservices.Acreditcardis,arguably,a(negative)storeofvaluebecauseyoucanaccumulatedebtwithit.Acreditcardisnotaunitofaccount—acar,forexample,doesnotcost5VISAcards.b.ARembrandtpaintingisastoreofvalueonly.khdaw.comc.Asubwaytoken,withinthesubwaysystem,satisfiesallthreefunctionsofmoney.Yetoutsidethesubwaysystem,itisnotwidelyusedasaunitofaccountoramediumofexchange,soitisnotaformofmoney.2.Therealinterestrateisthedifferencebetweenthenominalinterestrateandtheinfla-tionrate.Thenominalinterestrateis11percent,butweneedtosolvefortheinflationrate.Wedothiswiththequantityidentityexpressedinpercentage-changeform:%ChangeinM+%ChangeinV=%ChangeinP+%ChangeinY.Rearrangingthisequationtellsusthattheinflationrateisgivenby:%ChangeinP+%ChangeinM+%ChangeinV–%ChangeinY.Substitutingthenumbersgivenintheproblem,wethusfind:%ChangeinP=14%+0%–5%=9%.Thus,therealinterestrateis2percent:thenominalinterestrateof11percentminus课后答案网theinflationrateof9percent.3.a.LegislatorswishtoensurethattherealvalueofSocialSecurityandotherbenefitsstaysconstantovertime.Thisisachievedbyindexingbenefitstothecostoflivingwww.hackshp.cnasmeasuredbytheconsumerpriceindex.Withindexing,nominalbenefitschangeatthesamerateasprices.b.Assumingtheinflationismeasuredcorrectly(seeChapter2formoreonthisissue),seniorcitizensareunaffectedbythelowerrateofinflation.Althoughtheygetlessmoneyfromthegovernment,thegoodstheypurchasearecheaper;theirpurchasingpowerisexactlythesameasitwaswiththehigherinflationrate.4.Themajorbenefitofhavinganationalmoneyisseigniorage—theabilityofthegovern-menttoraiserevenuebyprintingmoney.Themajorcostisthepossibilityofinflation,orevenhyperinflation,ifthegovernmentreliestooheavilyonseigniorage.Thebenefitsandcostsofusingaforeignmoneyareexactlythereverse:thebenefitofforeignmoneyisthatinflationisnolongerunderdomesticpoliticalcontrol,butthecostisthatthedomesticgovernmentlosesitsabilitytoraiserevenuethroughseigniorage.(Thereisalsoasubjectivecosttohavingpicturesofforeignleadersonyourcurrency.)Theforeigncountry’spoliticalstabilityisakeyfactor.Theprimaryreasonforusinganothernation’smoneyistogainstability.Iftheforeigncountryisunstable,thenthehomecountryisdefinitelybetteroffusingitsowncurrency—thehomeecono-myremainsmorestable,anditkeepstheseigniorage.5.Apaperweaponmighthavebeeneffectiveforallthereasonsthatahyperinflationiskhdaw.combad.Forexample,itincreasesshoeleatherandmenucosts;itmakesrelativepricesmorevariable;italterstaxliabilitiesinarbitraryways;itincreasesvariabilityinrela-若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 26AnswerstoTextbookQuestionsandProblemstiveprices;itmakestheunitofaccountlessuseful;andfinally,itincreasesuncertaintyandcausesarbitraryredistributionsofwealth.Ifthehyperinflationissufficientlyextreme,itcanunderminethepublic’sconfidenceintheeconomyandeconomicpolicy.Notethatifforeignairplanesdroppedthemoney,thenthegovernmentwouldnotreceiveseignioragerevenuefromtheresultinginflation,sothisbenefitusuallyassoci-atedwithinflationislost.6.OnewaytounderstandCoolidge’sstatementistothinkofagovernmentthatisanetdebtorinnominaltermstotheprivatesector.LetBdenotethegovernment’soutstand-ingdebtmeasuredinU.S.dollars.ThedebtinrealtermsequalsB/P,wherePisthepricelevel.Byincreasinginflation,thegovernmentraisesthepricelevelandreducesinrealtermsthevalueofitsoutstandingdebt.Inthissensewecansaythatthegovern-mentrepudiatesthedebt.Thisonlymatters,however,wheninflationisunexpected.Ifinflationisexpected,peopledemandahighernominalinterestrate.Repudiationstilloccurs(i.e.,therealvalueofthedebtstillfallswhenthepricelevelrises),butitisnotattheexpenseoftheholdersofthedebt,sincetheyarecompensatedwithahighernominalinterestrate.khdaw.com7.Adeflationmeansafallinthegeneralpricelevel,whichisthesameasariseinthevalueofmoney.Underagoldstandard,ariseinthevalueofmoneyisariseinthevalueofgoldbecausemoneyandgoldareinafixedratio.Therefore,afteradeflation,anounceofgoldbuysmoregoodsandservices.Thiscreatesanincentivetolookfornewgolddepositsand,thus,moregoldisfoundafteradeflation.8.Anincreaseintherateofmoneygrowthleadstoanincreaseintherateofinflation.Inflation,inturn,causesthenominalinterestratetorise,whichmeansthattheoppor-tunitycostofholdingmoneyincreases.Asaresult,realmoneybalancesfall.Sincemoneyispartofwealth,realwealthalsofalls.Afallinwealthreducesconsumption,and,therefore,increasessaving.Theincreaseinsavingleadstoanoutwardshiftofthesavingschedule,asinFigure4–1.Thisleadstoalowerrealinterestrate.rFigure4–1SS课后答案网12www.hackshp.cnrA1RealinterestrateBr2I(r)I,SInvestment,SavingTheclassicaldichotomystatesthatachangeinanominalvariablesuchasinfla-tiondoesnotaffectrealvariables.Inthiscase,theclassicaldichotomydoesnothold;theincreaseintherateofinflationleadstoadecreaseintherealinterestrate.TheFishereffectstatesthati=r+π.Inthiscase,sincetherealinterestraterfalls,a1-percentincreaseininflationincreasesthenominalinterestrateibylessthan1per-cent.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter4MoneyandInflation27MosteconomistsbelievethatthisMundell–Tobineffectisnotimportantbecauserealmoneybalancesareasmallfractionofwealth.Hence,theimpactonsavingasillustratedinFigure4–1issmall.9.TheEconomist(www.economist.com)isausefulsiteforrecentdata.[Note:unfortu-nately,asofthiswriting(February2002),youneedapaidsubscriptiontogetaccesstomanyofthetablesonline.]Alternatively,theInternationalMonetaryFundhaslinkstocountrydatasources(www.imf.org;followthelinkstostandardsandcodesandthentodatadissemination).Forexample,inthetwelvemonthsendinginNovember2001,consumerpricesinTurkeyrose69percentfromayearearlier,M1rose55percentwhileM2rose52per-cent,andshort-terminterestrateswere54percent.Bycontrast,intheUnitedStatesinthetwelvemonthsendinginDecember2001,consumerpricesroseabout2percent,M1rose8percent,M2rose14percent;andshort-terminterestrateswerealittleunder2percent.Thesedataareconsistentwiththetheoriesinthechapter,inthathigh-infla-tioncountrieshavehigherratesofmoneygrowthandalsohighernominalinterestkhdaw.comrates.MoreProblemsandApplicationstoChapter41.Withconstantmoneygrowthatrateµ,thequestiontellsusthattheCaganmodelimpliesthatpt=mt+γµ.Thisquestiondrawsouttheimplicationsofthisequation.a.Onewaytointerpretthisresultistorearrangetofind:mt–pt=–γµ.Thatis,realbalancesdependonthemoneygrowthrate.Asthegrowthrateofmoneyrises,realbalancesfall.Thismakessenseintermsofthemodelinthischapter,sincefastermoneygrowthimpliesfasterinflation,whichmakesitlessdesirabletoholdmoneybalances.b.Withunchangedgrowthinthemoneysupply,theincreaseinthelevelofthemoneysupplymtincreasesthepricelevelptone-for-one.c.Withunchangedcurrentmoneysupply课后答案网mt,achangeinthegrowthrateofmoneyµchangesthepricelevelinthesamedirection.d.Whenthecentralbankreducestherateofmoneygrowthwww.hackshp.cnµ,thepricelevelwillimmediatelyfall.Tooffsetthisdeclineinthepricelevel,thecentralbankcanincreasethecurrentlevelofthemoneysupplymt,aswefoundinpart(b).Theseanswersassumethatateachpointintime,privateagentsexpectthegrowthrateofmoneytoremainunchanged,sothatthechangeinpolicytakesthembysur-prise—butonceithappens,itiscompletelycredible.Apracticalproblemisthattheprivatesectormightnotfinditcrediblethatanincreaseinthecurrentmoneysupplysignalsadecreaseinfuturemoneygrowthrates.e.Ifmoneydemanddoesnotdependontheexpectedrateofinflation,thenthepricelevelchangesonlywhenthemoneysupplyitselfchanges.Thatis,changesinthegrowthrateofmoneyµdonotaffectthepricelevel.Inpart(d),thecentralbankcankeepthecurrentpricelevelptconstantsimplybykeepingthecurrentmoneysupplymtconstant.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER5TheOpenEconomyQuestionsforReview1.Byrewritingthenationalincomeaccountsidentity,weshowinthetextthatS–I=NX.Thisformofthenationalincomeaccountsidentityshowstherelationshipbetweentheinternationalflowoffundsforcapitalaccumulation,S–I,andtheinternationalflowofgoodsandservices,NX.Netforeigninvestmentreferstothe(S–I)partofthisidentity:itistheexcessofdomesticsavingoverdomesticinvestment.Inanopeneconomy,domesticsavingneednotequaldomesticinvestment,becauseinvestorscanborrowandlendinworldfinan-cialmarkets.Thetradebalancereferstothe(NX)partoftheidentity:itisthediffer-khdaw.comencebetweenwhatweexportandwhatweimport.Thus,thenationalaccountsidentityshowsthattheinternationalflowoffundstofinancecapitalaccumulationandtheinternationalflowofgoodsandservicesaretwosidesofthesamecoin.2.Thenominalexchangerateistherelativepriceofthecurrencyoftwocountries.Therealexchangerate,sometimescalledthetermsoftrade,istherelativepriceofthegoodsoftwocountries.Ittellsustherateatwhichwecantradethegoodsofonecountryforthegoodsofanother.3.Acutindefensespendingincreasesgovernmentsavingand,hence,increasesnationalsaving.Investmentdependsontheworldrateandisunaffected.Hence,theincreaseinsavingcausesthe(S–I)scheduletoshifttotheright,asinFigure5–1.Thetradebal-ancerises,andtherealexchangeratefalls.Figure5–1∋S–IS–I课后答案网121∋www.hackshp.cnAB∋2RealexchangerateNX(∋)NXNXNX12Netexportskhdaw.com28若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy294.IfasmallopeneconomybanstheimportofJapaneseVCRs,thenforanygivenrealexchangerate,importsarelower,sothatnetexportsarehigher.Hence,thenetexportscheduleshiftsout,asinFigure5–2.∋S-IFigure5–2∋B2RealexchangerateANX2()∋∋1khdaw.comNX1()∋NXNetexportsTheprotectionistpolicyofbanningVCRsdoesnotaffectsaving,investment,ortheworldinterestrate,sotheS–Ischeduledoesnotchange.Becauseprotectionistpoliciesdonotaltereithersavingorinvestmentinthemodelofthischapter,theycannotalterthetradebalance.Instead,aprotectionistpolicydrivestherealexchangeratehigher.5.WecanrelatetherealandnominalexchangeratesbytheexpressionNominalRealRatioofExchange=Exchange×Price课后答案网RateRateLevelse=∋×(P*/P).LetP*betheItalianpricelevelandwww.hackshp.cnPbetheGermanpricelevel.ThenominalexchangerateeisthenumberofItalianliraperGermanmark(thisisasifwetakeGermanytobethe“domestic”country).Wecanexpressthisintermsofpercentagechangesovertimeas∋%Changeine=%Changein+(π*–π),whereπ*istheItalianinflationrateandπistheGermaninflationrate.IfItalianinfla-tionishigherthanGermaninflation,thenthisequationtellsusthatamarkbuysanincreasingamountofliraovertime:themarkrisesrelativetothelira.Alternatively,viewedfromtheItalianperspective,theexchangerateintermsofmarksperlirafalls.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 30AnswerstoTextbookQuestionsandProblemsProblemsandApplications1.a.Anincreaseinsavingshiftsthe(S–I)scheduletotheright,increasingthesupplyofdollarsavailabletobeinvestedabroad,asinFigure5–3.Theincreasedsupply∋∋ofdollarscausestheequilibriumrealexchangeratetofallfrom1to2.Becausethedollarbecomeslessvaluable,domesticgoodsbecomelessexpensiverelativetoforeigngoods,soexportsriseandimportsfall.Thismeansthatthetradebalanceincreases.Thenominalexchangeratefallsfollowingthemovementoftherealexchangerate,becausepricesdonotchangeinresponsetothisshock.(S–I)(S–I)Figure5–312khdaw.com1∋A∋B2RealexchangerateNX()∋NXNXNX12Netexportsb.TheintroductionofastylishlineofToyotasthatmakessomeconsumerspreferforeigncarsoverdomesticcarshasnoeffectonsavingorinvestment,butitshifts∋theNX()scheduleinward,asinFigure5–4.Thetradebalancedoesnotchange,∋∋buttherealexchangeratefallsfrom1to2.Becausepricesarenotaffected,thenominalexchangeratefollowstherealexchangerate.课后答案网∋www.hackshp.cn(S–I)Figure5–4∋A1RealexchangerateBNX1()∋2∋NX2()∋NXNetexportskhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy31c.Inthemodelweconsideredinthischapter,theintroductionofATMshasnoeffectonanyrealvariables.TheamountsofcapitalandlabordetermineoutputY.Theworldinterestrater*determinesinvestmentI(r*).Thedifferencebetweendomes-ticsavinganddomesticinvestment(S–I)determinesnetexports.Finally,the∋intersectionoftheNX()scheduleandthe(S–I)scheduledeterminestherealexchangerate,asinFigure5–5.Figure5–5∋S–Ikhdaw.com∋RealexchangerateNX()∋NXNetexportsTheintroductionofATMs,byreducingmoneydemand,doesaffectthenomi-nalexchangeratethroughitseffectonthedomesticpricelevel.Thepriceleveladjuststoequilibratethedemandandsupplyofrealbalances,sothat课后答案网dM/P=(M/P).dIfMisfixed,thenafallin(M/P)causesanincreaseinthepricelevel:thisreducesthesupplyofrealbalanceswww.hackshp.cnM/Pandrestoresequilibriuminthemoneymarket.Nowrecalltheformulaforthenominalexchangerate:e=∋×(P*/P).∋Weknowthattherealexchangerateremainsconstant,andweassumethattheforeignpricelevelP*isfixed.WhenthedomesticpricelevelPincreases,thenomi-nalexchangerateedepreciates.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 32AnswerstoTextbookQuestionsandProblems2.a.Nationalsavingistheamountofoutputthatisnotpurchasedforcurrentcon-sumptionbyhouseholdsorthegovernment.Weknowoutputandgovernmentspending,andtheconsumptionfunctionallowsustosolveforconsumption.Hence,nationalsavingisgivenby:S=Y–C–G=5,000–(250+0.75(5,000–1,000))–1,000=750.Investmentdependsnegativelyontheinterestrate,whichequalstheworldrater*of5.Thus,I=1,000–50×5=750.Netexportsequalsthedifferencebetweensavingandinvestment.Thus,NX=S–I=750–750khdaw.com=0.Havingsolvedfornetexports,wecannowfindtheexchangeratethatclearstheforeign-exchangemarket:NX=500–500×ε0=500–500×εε=1.b.Doingthesameanalysiswiththenewvalueofgovernmentspendingwefind:S=Y–C–G=5,000–(250+0.75(5,000–1,000))–1,250=500I=1,000–50×5=750课后答案网NX=S–I=500–750=–250www.hackshp.cnNX=500–500×ε–250=500–500×εε=1.5.Theincreaseingovernmentspendingreducesnationalsaving,butwithanunchangedworldrealinterestrate,investmentremainsthesame.Therefore,domesticinvestmentnowexceedsdomesticsaving,sosomeofthisinvestmentmustbefinancedbyborrowingfromabroad.Thiscapitalinflowisaccomplishedbyreducingnetexports,whichrequiresthatthecurrencyappreciate.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy33c.Repeatingthesamestepswiththenewinterestrate,S=Y–C–G=5,000–(250+0.75(5,000–1,000))–1,000=750I=1,000–50×10=500NX=S–I=750–500=250NX=500–500×ε250=500–500×εε=0.5.Savingisunchangedfrompart(a),butthehigherworldinterestratelowerskhdaw.cominvestment.Thiscapitaloutflowisaccomplishedbyrunningatradesurplus,whichrequiresthatthecurrencydepreciate.3.a.WhenLeverett’sexportsbecomelesspopular,itsdomesticsavingY–C–Gdoesnotchange.ThisisbecauseweassumethatYisdeterminedbytheamountofcap-italandlabor,consumptiondependsonlyondisposableincome,andgovernmentspendingisafixedexogenousvariable.Investmentalsodoesnotchange,sinceinvestmentdependsontheinterestrate,andLeverettisasmallopeneconomythattakestheworldinterestrateasgiven.Becauseneithersavingnorinvestmentchanges,netexports,whichequalS–I,donotchangeeither.ThisisshowninFigure5–6astheunmovingS–Icurve.ThedecreasedpopularityofLeverett’sexportsleadstoashiftinwardofthenetexportscurve,asshowninFigure5–6.Atthenewequilibrium,netexportsareunchangedbutthecurrencyhasdepreciated.ε课后答案网Figure5–6S–Iwww.hackshp.cnε2ε1NX(ε)1RealexchangerateNX(ε)2{NX=NXNX12NetexportsEventhoughLeverett’sexportsarelesspopular,itstradebalancehasremainedthesame.Thereasonforthisisthatthedepreciatedcurrencyprovidesastimulustonetexports,whichovercomestheunpopularityofitsexportsbymak-ingthemcheaper.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 34AnswerstoTextbookQuestionsandProblemsb.Leverett’scurrencynowbuyslessforeigncurrency,sotravelingabroadismoreexpensive.Thisisanexampleofthefactthatimports(includingforeigntravel)havebecomemoreexpensive—asrequiredtokeepnetexportsunchangedinthefaceofdecreaseddemandforexports.c.Ifthegovernmentreducestaxes,thendisposableincomeandconsumptionrise.Hence,savingfallssothatnetexportsalsofall.Thisfallinnetexportsputsupwardpressureontheexchangeratethatoffsetsthedecreasedworlddemand.InvestmentandtheinterestratewouldbeunaffectedbythispolicysinceLeveretttakestheworldinterestrateasgiven.4.Theincreaseingovernmentspendingdecreasesgovernmentsavingand,thus,decreas-esnationalsaving;thisshiftsthesavingscheduletotheleft,asinFigure5–7.Giventheworldinterestrater*,thedecreaseindomesticsavingcausesthetradebalancetofall.rSSFigure5–7khdaw.com21r*RealinterestrateCurrent-accountTradedeficitdeficit=I(r)Capital-accountsurplusI,S课后答案网Investment,Savingwww.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy35Figure5–8showstheimpactofthisincreaseingovernmentpurchasesontherealexchangerate.Thedecreaseinnationalsavingcausesthe(S–I)scheduletoshifttotheleft,loweringthesupplyofdollarstobeinvestedabroad.Thelowersupplyofdol-larscausestheequilibriumrealexchangeratetorise.Asaresult,domesticgoodsbecomemoreexpensiverelativetoforeigngoods,whichcausesexportstofallandimportstorise.Inotherwords,aswedeterminedinFigure5–7,thetradebalancefalls.∋(S–I)(S–I)21Figure5–8B∋1khdaw.com∋2ARealexchangerateChangeinthetradecurrentNX()∋balanceaccountNXNXNXNX21NetexportsNetexports课后答案网www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 36AnswerstoTextbookQuestionsandProblemsTheanswertothisquestiondoesdependonwhetherthisisalocalwaroraworldwar.Aworldwarcausesmanygovernmentstoincreaseexpenditures;thisincreasestheworldinterestrater*.Theeffectonacountry’sexternalaccountsdependsonthesizeofthechangeintheworldinterestraterelativetothesizeofthedecreaseinsav-ing.Forexample,anincreaseintheworldinterestratecouldcauseacountrytohaveatradedeficit,asinFigure5–9,oratradesurplus,asinFigure5–10.rSSFigure5–921r*2Current-accountTradedeficitkhdaw.comr*deficit1RealinterestrateI(r)I,SInvestment,SavingrCurrent-Figure5–10accountTradeSS21课后答案网surplussurplusr*2www.hackshp.cnr*1RealinterestrateI(r)I,SInvestment,Savingkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy375.Clinton’spolicywouldnotaffectnetexportsbecauseitdoesnotaffectnationalsaving(becauseitwouldnotaffectY,C,orG)orinvestment.Itwould,however,shifttheNXcurvebydecreasingU.S.demandforJapaneseautoimports.Thisshiftofthecurve,showninFigure5–11,wouldraisetheexchangerate.Althoughnetexportswouldnotchange,thevolumeofbothimportsandexportswouldfallbythesameamount.Figure5–11εS–Iε2ε1NX(ε)2Realexchangeratekhdaw.comNX(ε)1{NX=NXNX12NetexportsTherearealsoimportantcompositionaleffectsofthispolicy.Ontheproductionside,thehigherexchangerateincreasesimportsandputspressureonthesalesofAmericancompanieswiththeexceptionofAmericanluxurycarproduction,whichisshieldedbythetariff.AlsoAmericanexporterswillbehurtbythehigherexchangerate,whichmakestheirgoodsmoreexpensivetoforeigncountries.ConsumersofJapaneseluxurycarswillbehurtbythetariffswhileallotherconsumerswillbenefitfromtheappreci-ateddollar,whichallowsthemtopurchasegoodsmorecheaply.Insum,thepolicywouldshiftdemandtoAmericanluxurycarproducersattheexpenseoftherestof课后答案网AmericanproductionandalsoshiftconsumptionfromJapaneseluxurycarstoallotherimports.www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 38AnswerstoTextbookQuestionsandProblems6.a.Ifthecountriesthatinstituteaninvestmenttaxcreditarelargeenoughtoshifttheworldinvestmentdemandschedule,thenthetaxcreditsshifttheworldinvestmentdemandscheduleupward,asinFigure5–12.rSFigure5–12r*B2Ar*Realinterestrate1I(r)2I(r)khdaw.com1I,SWorldinvestment,Worldsavingb.Theworldinterestrateincreasesfromr*tor*becauseoftheincreaseinworld12investmentdemand;thisisshowninFigure5–12.(Rememberthattheworldisaclosedeconomy.)c.Theincreaseintheworldinterestrateincreasestherequiredrateofreturnoninvestmentsinourcountry.Becausetheinvestmentscheduleslopesdownward,weknowthatahigherworldinterestratemeanslowerinvestment,asinFigure5–13.r课后答案网Figure5–13r*www.hackshp.cn2r*1RealinterestrateI(r)III21Investmentkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy39d.Giventhatoursavinghasnotchanged,thehigherworldinterestratemeansthatourtradebalanceincreases,asinFigure5–14.rCurrent-accountSFigure5–14surplus=Capital-accountTradesurplusdeficitr*2r*Realinterestrate1khdaw.comI(r)I,SInvestment,Savinge.Tobringabouttherequiredincreaseinthetradebalance,therealexchangeratemustfall.Ourgoodsbecomelessexpensiverelativetoforeigngoods,sothatexportsincreaseandimportsdecrease,asinFigure5–15.∋(S–I)(S–I)Figure5–15121∋课后答案网Awww.hackshp.cnB∋2RealexchangerateNX()∋NXNXNX12Netexports7.Theeasiestwaytotellifyourfriendisrightorwrongistoconsideranexample.Supposethattenyearsago,acupofAmericancoffeecost$1,whileacupofItalianespressocost1,000lira.Since$1bought1,000liratenyearsago,itcostthesameamountofmoneytobuyacupofcoffeeinbothcountries.SincetotalU.S.inflationhasbeen25percent,theAmericancupofcoffeenowcosts$1.25.TotalItalianinflationhasbeen100percent,sotheItaliancupofespressonowcosts2,000lira.Thisyear,$1buys1,500lira,sothatthecupofespressocosts2,000lira/[1,500lira/dollar]=$1.33.Thiskhdaw.commeansthatitisnowmoreexpensivetopurchaseespressoinItalythancoffeeintheUnitedStates.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 40AnswerstoTextbookQuestionsandProblemsThus,yourfriendissimplywrongtoconcludethatitischeapertotravelinItaly.Eventhoughthedollarbuysmorelirathanitusedto,therelativelyrapidinflationinItalymeansthatlirabuyfewergoodsthantheyusedto—itismoreexpensivenowforanAmericantotravelthere.8.a.TheFisherequationsaysthati=r+πewherei=thenominalinterestrater=therealinterestrate(sameinbothcountries)πe=theexpectedinflationrate.Plugginginthevaluesgiveninthequestionforthenominalinterestratesforeachcountry,wefind:e12=r+πCan*8=r+πekhdaw.comUS*Thisimpliesthatee€€€€€€€€€€€€€π–π=4.CanUSBecauseweknowthattherealinterestrateristhesameinbothcountries,weconcludethatexpectedinflationinCanadaisfourpercentagepointshigherthanintheUnitedStates.b.Asinthetext,wecanexpressthenominalexchangeratease=ε×(PCan/PUS),whereε=therealexchangeratePCan=thepricelevelinCanadaPUS=thepricelevelintheUnitedStates.Thechangeinthenominalexchangeratecanbewrittenas:课后答案网%changeine=%changeinε+(πCan–πUS).Weknowthatifpurchasing-powerparityholds,thanadollarmusthavethesamepurchasingpowerineverycountry.Thisimpliesthatthepercentchangeinthewww.hackshp.cnrealexchangerateεiszerobecausepurchasing-powerparityimpliesthattherealexchangerateisfixed.Thus,changesinthenominalexchangerateresultfromdifferencesintheinflactionratesintheUnitedStatesandCanada.Inequationformthissays%changeine=(πCan–πUS).Becauseeconomicagentsknowthatpurchasing-powerparityholds,theyexpectthisrelationshiptohold.Inotherwords,theexpectedchangeinthenominalexchangerateequalstheexpectedinflationrateinCanadaminustheexpectedinflationrateintheUnitedStates.Thatis,eeExpected%changeine=π–πCanUS*Inpart(a),wefoundthatthedifferenceinexpectedinflationratesis4percent.Therefore,theexpectedchangeinthenominalexchangerateeis4percent.c.Theproblemwithyourfriend’sschemeisthatitdoesnottakeintoaccountthechangeinthenominalexchangerateebetweentheU.S.andCanadiandollars.GiventhattherealinterestrateisfixedandidenticalintheUnitedStatesandkhdaw.comCanada,andgivenpurchasing-powerparity,weknowthatthedifferenceinnomi-若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy41nalinterestratesaccountsfortheexpectedchangeinthenominalexchangeratebetweenU.S.andCanadiandollars.Inthisexample,theCanadiannominalinterestrateis12percent,whiletheU.S.nominalinterestrateis8percent.Weconcludefromthisthattheexpectedchangeinthenominalexchangerateis4percent.Therefore,ethisyear=1C$/US$.enextyear=1.04C$/US$.Assumethatyourfriendborrows1U.S.dollarfromanAmericanbankat8percent,exchangesitfor1Canadiandollar,andputsitinaCanadianBank.Attheendoftheyearyourfriendwillhave$1.12inCanadiandollars.ButtorepaytheAmericanbank,theCanadiandollarsmustbeconvertedbackintoU.S.dollars.The$1.12(Canadian)becomes$1.08(American),whichistheamountowedtotheU.S.bank.Sointheend,yourfriendbreakseven.Infact,afterpayingfortransactioncosts,yourfriendlosesmoney.khdaw.comMoreProblemsandApplicationstoChapter51.a.AsshowninFigure5–16,anincreaseingovernmentpurchasesreducesnationalsaving.Thisreducesthesupplyofloansandraisestheequilibriuminterestrate.Thiscausesbothdomesticinvestmentandnetforeigninvestmenttofall.Thefallinnetforeigninvestmentreducesthesupplyofdollarstobeexchangedintofor-eigncurrency,sotheexchangerateappreciatesandthetradebalancefalls.Figure5–16A.TheMarketforLoanableFundsB.NetForeignInvestmentrrS课后答案网Realinterestratewww.hackshp.cnI+NFINFI(r)S,I+NFINFILoansNetforeigninvestmentC.TheMarketforForeignExchange∋NFIRealexchangerateNX()∋khdaw.comNXNetexports若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 42AnswerstoTextbookQuestionsandProblemsb.AsshowninFigure5–17,theincreaseindemandforexportsshiftsthenetexportsscheduleoutward.Sincenothinghaschangedinthemarketforloanablefunds,theinterestrateremainsthesame,whichinturnimpliesthatnetforeigninvest-mentremainsthesame.Theshiftinthenetexportsschedulecausestheexchangeratetoappreciate.TheriseintheexchangeratemakesU.S.goodsmoreexpensiverelativetoforeigngoods,whichdepressesexportsandstimulatesimports.Intheend,theincreaseindemandforAmericangoodsdoesnotaffectthetradebalance.Figure5–17A.TheMarketforLoanableFundsB.NetForeignInvestmentrrSkhdaw.comRealinterestrateI+NFINFI(r)S,I+NFINFILoansNetforeigninvestmentC.TheMarketforForeignExchange∋NFI课后答案网www.hackshp.cnRealexchangerateNX()∋NXNetexportskhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy43c.AsshowninFigure5–18,theU.S.investmentdemandscheduleshiftsinward.Thedemandforloansfalls,sotheequilibriuminterestratefalls.Thelowerinter-estrateincreasesnetforeigninvestment.Despitethefallintheinterestrate,domesticinvestmentfalls;weknowthisbecauseI+NFIdoesnotchange,andNFIrises.Theriseinnetforeigninvestmentincreasesthesupplyofdollarsinthemarketforforeignexchange.Theexchangeratedepreciates,andnetexportsrise.Figure5–18A.TheMarketforLoanableFundsB.NetForeignInvestmentrrSRealinterestratekhdaw.comI+NFINFI(r)S,I+NFINFILoansNetforeigninvestmentC.TheMarketforForeignExchange∋NFI课后答案网www.hackshp.cnRealexchangerateNX()∋NXNetexportskhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 44AnswerstoTextbookQuestionsandProblemsd.AsshowninFigure5–19,theincreaseinsavingincreasesthesupplyofloansandlowerstheequilibriuminterestrate.Thiscausesbothdomesticinvestmentandnetforeigninvestmenttorise.Theincreaseinnetforeigninvestmentincreasesthesupplyofdollarstobeexchangedintoforeigncurrency,sotheexchangeratedepreciatesandthetradebalancerises.Figure7-17Figure5–19A.TheMarketforLoanableFundsB.NetForeignInvestmentrrSkhdaw.comRealinterestrateI+NFINFI(r)S,I+NFINFILoansNetforeigninvestmentC.TheMarketforForeignExchange∋NFI课后答案网Realexchangeratewww.hackshp.cnNX()∋NXNetexportskhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy45e.ThereductioninthewillingnessofAmericanstotravelabroadreducesimports,sinceforeigntravelcountsasanimport.AsshowninFigure5–20,thisshiftsthenetexportsscheduleoutward.Sincenothinghaschangedinthemarketforloan-ablefunds,theinterestrateremainsthesame,whichinturnimpliesthatnetfor-eigninvestmentremainsthesame.Theshiftinthenetexportsschedulecausestheexchangeratetoappreciate.TheriseintheexchangeratemakesU.S.goodsmoreexpensiverelativetoforeigngoods,whichdepressesexportsandstimulatesimports.Intheend,thefallinAmericans’desiretotravelabroaddoesnotaffectthetradebalance.Figure5–20A.TheMarketforLoanableFundsB.NetForeignInvestmentrrSkhdaw.comRealinterestrateI+NFINFI(r)S,I+NFINFILoansNetforeigninvestmentC.TheMarketforForeignExchange∋课后答案网NFIwww.hackshp.cnRealexchangerateNX()∋NXNetexportskhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 46AnswerstoTextbookQuestionsandProblemsf.AsshowninFigure5–21,thenetforeigninvestmentscheduleshiftsin.Thisreducesdemandforloans,sotheequilibriuminterestratefallsandinvestmentrises.Netforeigninvestmentfalls,despitethefallintheinterestrate;weknowthisbecauseI+NFIisunchangedandinvestmentrises.Thefallinnetforeigninvestmentreducesthesupplyofdollarstobeexchangedintoforeigncurrency,sotheexchangerateappreciatesandthetradebalancefalls.FFigure7-19igure5–21A.TheMarketforLoanableFundsB.NetForeignInvestmentrrSRealinterestratekhdaw.comI+NFINFI(r)S,I+NFINFILoansNetforeigninvestmentC.TheMarketforForeignExchange∋NFI课后答案网www.hackshp.cnRealexchangerateNX()∋NXNetexportskhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter5TheOpenEconomy472.Gingrich’sstatementhasnoimmediateeffectonanyofthe“fundamentals”intheecon-omy:consumption,governmentpurchases,taxes,andoutputareallunchanged.Internationalinvestors,however,willbemorereluctanttoinvestintheAmericanecon-omy,particularlytopurchaseU.S.governmentdebt,becauseofthedefaultrisk.AsbothAmericansandforeignersmovetheirmoneyoutoftheUnitedStates,theNFIcurveshiftsoutward(thereismoreforeigninvestment),asshowninFigure5–22(B).ThisraisestheinterestrateinordertokeepI+NFIequaltotheunchangedS,showninFigure5–22(A).TheincreaseinNFIraisesthesupplyinthemarketforforeignexchange,whichlowerstheequilibriumexchangerateasshowninFigure5–22(C).Figure5–22Figure8–22A.TheMarketforLoanableFundsB.NetForeignInvestmentrrSkhdaw.comRealinterestrateI+NFINFI(r)S,I+NFINFILoansNetforeigninvestmentC.TheMarketforForeignExchangeεNFI课后答案网Realexchangeratewww.hackshp.cnNX(ε)NXNetexportskhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER6UnemploymentQuestionsforReview1.Theratesofjobseparationandjobfindingdeterminethenaturalrateofunemploy-ment.Therateofjobseparationisthefractionofpeoplewholosetheirjobeachmonth.Thehighertherateofjobseparation,thehigherthenaturalrateofunemployment.Therateofjobfindingisthefractionofunemployedpeoplewhofindajobeachmonth.Thehighertherateofjobfinding,thelowerthenaturalrateofunemployment.2.Frictionalunemploymentistheunemploymentcausedbythetimeittakestomatchworkersandjobs.Findinganappropriatejobtakestimebecausetheflowofinforma-tionaboutjobcandidatesandjobvacanciesisnotinstantaneous.Becausedifferentjobsrequiredifferentskillsandpaydifferentwages,unemployedworkersmaynotacceptthefirstjoboffertheyreceive.khdaw.comIncontrast,waitunemploymentistheunemploymentresultingfromwagerigidityandjobrationing.Theseworkersareunemployednotbecausetheyareactivelysearch-ingforajobthatbestsuitstheirskills(asinthecaseoffrictionalunemployment),butbecauseattheprevailingrealwagethesupplyoflaborexceedsthedemand.Ifthewagedoesnotadjusttoclearthelabormarket,thentheseworkersmust“wait”forjobstobecomeavailable.Waitunemploymentthusarisesbecausefirmsfailtoreducewagesdespiteanexcesssupplyoflabor.3.Therealwagemayremainabovethelevelthatequilibrateslaborsupplyandlabordemandbecauseofminimumwagelaws,themonopolypowerofunions,andefficiencywages.Minimum-wagelawscausewagerigiditywhentheypreventwagesfromfallingtoequilibriumlevels.Althoughmostworkersarepaidawageabovetheminimumlevel,forsomeworkers,especiallytheunskilledandinexperienced,theminimumwageraisestheirwageabovetheequilibriumlevel.Itthereforereducesthequantityoftheirlaborthatfirmsdemand,andanexcesssupplyofworkers—thatis,unemployment—results.Themonopolypowerofunionscauseswagerigiditybecausethewagesofunion-课后答案网izedworkersaredeterminednotbytheequilibriumofsupplyanddemandbutbycol-lectivebargainingbetweenunionleadersandfirmmanagement.Thewageagreementoftenraisesthewageabovetheequilibriumlevelandallowsthefirmtodecidehowwww.hackshp.cnmanyworkerstoemploy.Thesehighwagescausefirmstohirefewerworkersthanatthemarket-clearingwage,sowaitunemploymentincreases.Efficiency-wagetheoriessuggestthathighwagesmakeworkersmoreproductive.Theinfluenceofwagesonworkerefficiencymayexplainwhyfirmsdonotcutwagesdespiteanexcesssupplyoflabor.Eventhoughawagereductiondecreasesthefirm’swagebill,itmayalsolowerworkerproductivityandthereforethefirm’sprofits.4.Dependingonhowonelooksatthedata,mostunemploymentcanappeartobeeithershorttermorlongterm.Mostspellsofunemploymentareshort;thatis,mostofthosewhobecameunemployedfindjobsquickly.Ontheotherhand,mostweeksofunemploy-mentareattributabletothesmallnumberoflong-termunemployed.Bydefinition,thelong-termunemployeddonotfindjobsquickly,sotheyappearonunemploymentrollsformanyweeksormonths.5.Economistshaveproposedatleasttwomajorhypothesestoexplaintheincreaseinthenaturalrateofunemploymentinthe1970sand1980s,andthedecreaseinthenaturalrateinthe1990s.Thefirstisthechangingdemographiccompositionofthelaborforce.Becauseofthepost–World-War-IIbabyboom,thenumberofyoungworkersroseinthekhdaw.com48若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter6Unemployment491970s.Youngworkershavehigherratesofunemployment,sothisdemographicshiftshouldtendtoincreaseunemployment.Inthe1990s,thebaby-boomworkersagedandtheaverageageofthelaborforceincreased,thusloweringtheaverageunemploymentrate.Thesecondhypothesisisbasedonchangesintheprevalenceofsectoralshifts.Thegreatertheamountofsectoralreallocationofworkers,thegreatertherateofjobseparationandthehighertheleveloffrictionalunemployment.Thevolatilityofoilpricesinthe1970sand1980sisapossiblesourceofincreasedsectoralshifts;inthe1990s,oilpriceshavebeenmorestable.Theproposedexplanationsareplausible,butneitherseemsconclusiveonitsown.ProblemsandApplications1.a.Intheexamplethatfollows,weassumethatduringtheschoolyearyoulookforapart-timejob,andthatonaverageittakes2weekstofindone.Wealsoassumekhdaw.comthatthetypicaljoblasts1semester,or12weeks.Ifittakes2weekstofindajob,thentherateofjobfindinginweeksis:f=(1job/2weeks)=0.5jobs/weeks.b.Ifthejoblastsfor12weeks,thentherateofjobseparationinweeksis:s=(1job/12weeks)=0.083jobs/week.c.Fromthetext,weknowthattheformulaforthenaturalrateofunemploymentis(U/L)=(s/(s+f)),whereUisthenumberofpeopleunemployedandListhenumberofpeopleinthelaborforce.Plugginginthevaluesforfandsthatwerecalculatedinpart(b),wefind:(U/L)=(0.083/(0.083+0.5))=0.14.Thus,ifonaverageittakes2weekstofindajobthatlasts12weeks,thenaturalrateofunemploymentforthispopulationofcollegestudentsseekingpart-time课后答案网employmentis14percent.2.Toshowthattheunemploymentrateevolvesovertimetothesteady-staterate,let’sbeginbydefininghowthenumberofpeopleunemployedchangesovertime.Thechangewww.hackshp.cninthenumberofunemployedequalsthenumberofpeoplelosingjobs(sE)minusthenumberfindingjobs(fU).Inequationform,wecanexpressthisas:Ut+1–Ut=∆Ut+1=sEt–fUt.RecallfromthetextthatL=Et+Ut,orEt=L–Ut,whereListhetotallaborforce(wewillassumethatLisconstant).SubstitutingforEtintheaboveequation,wefind:∆Ut+1=s(L–Ut)–fUt.DividingbyL,wegetanexpressionforthechangeintheunemploymentratefromttot+1:∆Ut+1/L=(Ut+1/L)–(Ut/L)=∆[U/L]t+1=s(1–Ut/L)–fUt/L.Rearrangingtermsontheright-handside,wefind:∆[U/L]t+1=s–(s+f)Ut/L=(s+f)[s/(s+f)–Ut/L].khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 50AnswerstoTextbookQuestionsandProblemsThefirstpointtonoteaboutthisequationisthatinsteadystate,whentheunemploy-mentrateequalsitsnaturalrate,theleft-handsideofthisexpressionequalszero.Thisntellsusthat,aswefoundinthetext,thenaturalrateofunemployment(U/L)equalsns/(s+f).Wecannowrewritetheaboveexpression,substituting(U/L)fors/(s+f),togetanequationthatiseasiertointerpret:n∆[U/L]t+1=(s+f)[(U/L)–Ut/L].Thisexpressionshowsthefollowing:n•IfUt/L>(U/L)(thatis,theunemploymentrateisaboveitsnaturalrate),then∆[U/L]t+1isnegative:theunemploymentratefalls.n•IfUt/L<(U/L)(thatis,theunemploymentrateisbelowitsnaturalrate),then∆[U/L]t+1ispositive:theunemploymentraterises.ThisprocesscontinuesuntiltheunemploymentrateU/Lreachesthesteady-stateraten(U/L).3.CallthenumberofresidentsofthedormwhoareinvolvedI,thenumberwhoareunin-khdaw.comvolvedU,andthetotalnumberofstudentsT=I+U.Insteadystatethetotalnumberofinvolvedstudentsisconstant.Forthistohappenweneedthenumberofnewlyunin-volvedstudents,(0.10)I,tobeequaltothenumberofstudentswhojustbecameinvolved,(0.05)U.Followingafewsubstitutions:(0.05)U=(0.10)I=(0.10)(T–U),soU0.10=T0.10+0.052=.3Wefindthattwo-thirdsofthestudentsareuninvolved.4.Considertheformulaforthenaturalrateofunemployment,课后答案网Us=.www.hackshp.cnLs+fIfthenewlawlowersthechanceofseparations,buthasnoeffectontherateofjobfindingf,thenthenaturalrateofunemploymentfalls.Forseveralreasons,however,thenewlawmighttendtoreducef.First,raisingthecostoffiringmightmakefirmsmorecarefulabouthiringworkers,sincefirmshaveahardertimefiringworkerswhoturnouttobeapoormatch.Second,ifsearchersthinkthatthenewlegislationwillleadthemtospendalongerperiodoftimeonapar-ticularjob,thentheymightweighmorecarefullywhetherornottotakethatjob.Ifthereductioninfislargeenough,thenthenewpolicymayevenincreasethenaturalrateofunemployment.5.a.Thedemandforlaborisdeterminedbytheamountoflaborthataprofit-maximiz-ingfirmwantstohireatagivenrealwage.Theprofit-maximizingconditionisthatthefirmhirelaboruntilthemarginalproductoflaborequalstherealwage,WMPL=.Pkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter6Unemployment51Themarginalproductoflaborisfoundbydifferentiatingtheproductionfunctionwithrespecttolabor(seetheappendixtoChapter3formorediscussion),dYMPL=.dL1/32/3d(KL)=dL21/3–1/3=KL.3Inordertosolveforlabordemand,wesettheMPLequaltotherealwageandsolveforL:21/3–1/3WKL=3PW–38L=K.27()Pkhdaw.comNoticethatthisexpressionhastheintuitivelydesirablefeaturethatincreasesintherealwagereducethedemandforlabor.b.Weasumethatthe1,000unitsofcapitalandthe1,000unitsoflaboraresuppliedinelastically(i.e.,theywillworkatanyprice).Inthiscaseweknowthatall1,000unitsofeachwillbeusedinequilibrium,sowecansubstitutethemintotheabovelabordemandfunctionandsolvefor.WP–38W1,000=1,000()27PW2=.P3Inequilibrium,employmentwillbe1,000,andmultiplyingthisby2/3wefindthattheworkersearn667unitsofoutput.Thetotaloutputisgivenbytheproductionfunction:1/32/3课后答案网Y=KL1/32/3=1,0001,000www.hackshp.cn=1,000.Noticethatworkersgettwo-thirdsofoutput,whichisconsistentwithwhatweknowabouttheCobb–DouglasproductionfunctionfromtheappendixtoChapter3.c.Thecongressionallymandatedwageof1unitofoutputisabovetheequilibriumwageof2/3unitsofoutput.d.Firmswillusetheirlabordemandfunctiontodecidehowmanyworkerstohireatthegivenrealwageof1andcapitalstockof1,000:8–3L=1,000(1)27=296,so296workerswillbehiredforatotalcompensationof296unitsofoutput.e.Thepolicyredistributesoutputfromthe704workerswhobecomeinvoluntarilyunemployedtothe296workerswhogetpaidmorethanbefore.Theluckyworkersbenefitlessthanthelosersloseasthetotalcompensationtotheworkingclassfallsfrom667to296unitsofoutput.f.Thisproblemdoesfocustheanalysisofminimum-wagelawsonthetwoeffectsofkhdaw.comtheselaws:theyraisethewageforsomeworkerswhiledownward-slopinglabordemandreducesthetotalnumberofjobs.Note,however,thatiflabordemandis若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 52AnswerstoTextbookQuestionsandProblemslesselasticthaninthisexample,thenthelossofemploymentmaybesmaller,andthechangeinworkerincomemightbepositive.6.a.Thelabordemandcurveisgivenbythemarginalproductoflaborschedulefacedbyfirms.Ifacountryexperiencesareductioninproductivity,thenthelabordemandcurveshiftsdownwardasinFigure6–1.Iflaborbecomeslessproductive,thenatanygivenrealwage,firmsdemandlesslabor.w/pFigure6–1khdaw.comRealwageDL1DL2LLaborb.Ifthelabormarketisalwaysinequilibrium,then,assumingafixedlaborsupply,anadverseproductivityshockcausesadecreaseintherealwagebuthasnoeffectonemploymentorunemployment,asinFigure6–2.w/p课后答案网LSFigure6–2www.hackshp.cnw/pRealwage1w/pLD21LD2LLLaborkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter6Unemployment53c.Ifunionsconstrainrealwagestoremainunaltered,thenasillustratedinFigure6–3,employmentfallstoL1andunemploymentequalsL–L1.w/pLSFigure6–3BAw/p1RealwageLD1DLkhdaw.com2LLL1UnemploymentLaborThisexampleshowsthattheeffectofaproductivityshockonaneconomydependsontheroleofunionsandtheresponseofcollectivebargainingtosuchachange.7.Thevacantofficespaceproblemissimilartotheunemploymentproblem;wecanapplythesameconceptsweusedinanalyzingunemployedlabortoanalyzewhyvacantofficespaceexists.Thereisarateofofficeseparation:firmsthatoccupyofficesleave,eithertomovetodifferentofficesorbecausetheygooutofbusiness.Thereisarateofofficefinding:firmsthatneedofficespace(eithertostartuporexpand)findemptyoffices.Ittakestimetomatchfirmswithavailablespace.Differenttypesoffirmsrequirespaceswithdifferentattributesdependingonwhattheirspecificneedsare.Also,because课后答案网demandfordifferentgoodsfluctuates,thereare“sectoralshifts”—changesinthecom-positionofdemandamongindustriesandregions—thataffecttheprofitabilityandofficeneedsofdifferentfirms.www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER7EconomicGrowthIQuestionsforReview1.IntheSolowgrowthmodel,ahighsavingrateleadstoalargesteady-statecapitalstockandahighlevelofsteady-stateoutput.Alowsavingrateleadstoasmallsteady-statecapitalstockandalowlevelofsteady-stateoutput.Highersavingleadstofastereconomicgrowthonlyintheshortrun.Anincreaseinthesavingrateraisesgrowthuntiltheeconomyreachesthenewsteadystate.Thatis,iftheeconomymaintainsahighsavingrate,itwillalsomaintainalargecapitalstockandahighlevelofoutput,butitwillnotmaintainahighrateofgrowthforever.2.Itisreasonabletoassumethattheobjectiveofaneconomicpolicymakeristomaximizetheeconomicwell-beingoftheindividualmembersofsociety.Sinceeconomicwell-beingdependsontheamountofconsumption,thepolicymakershouldchoosethesteadystatekhdaw.comwiththehighestlevelofconsumption.TheGoldenRulelevelofcapitalrepresentsthelevelthatmaximizesconsumptioninthesteadystate.Suppose,forexample,thatthereisnopopulationgrowthortechnologicalchange.Ifthesteady-statecapitalstockincreasesbyoneunit,thenoutputincreasesbythemarginalproductofcapitalMPK;depreciation,however,increasesbyanamountδ,sothatthenetamountofextraoutputavailableforconsumptionisMPK–δ.TheGoldenRulecapitalstockisthelevelatwhichMPK=δ,sothatthemarginalproductofcapitalequalsthedepreciationrate.3.WhentheeconomybeginsabovetheGoldenRulelevelofcapital,reachingtheGoldenRulelevelleadstohigherconsumptionatallpointsintime.Therefore,thepolicymakerwouldalwayswanttochoosetheGoldenRulelevel,becauseconsumptionisincreasedforallperiodsoftime.Ontheotherhand,whentheeconomybeginsbelowtheGoldenRulelevelofcapital,reachingtheGoldenRulelevelmeansreducingconsumptiontodaytoincreaseconsumptioninthefuture.Inthiscase,thepolicymaker’sdecisionisnotasclear.Ifthepolicymakercaresmoreaboutcurrentgenerationsthanaboutfuturegener-ations,heorshemaydecide课后答案网nottopursuepoliciestoreachtheGoldenRulesteadystate.Ifthepolicymakercaresequallyaboutallgenerations,thenheorshechoosestoreachtheGoldenRule.Eventhoughthecurrentgenerationwillhavetoconsumeless,aninfinitenumberoffuturegenerationswillbenefitfromincreasedconsumptionbywww.hackshp.cnmovingtotheGoldenRule.khdaw.com54若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter7EconomicGrowthI554.Thehigherthepopulationgrowthrateis,thelowerthesteady-statelevelofcapitalperworkeris,andthereforethereisalowerlevelofsteady-stateincome.Forexample,Figure7–1showsthesteadystatefortwolevelsofpopulationgrowth,alowleveln1andahigherleveln2.Thehigherpopulationgrowthn2meansthatthelinerepresent-ingpopulationgrowthanddepreciationishigher,sothesteady-statelevelofcapitalperworkerislower.Figure7–1Figure4-1(δ+n)k2(δ+n)k1sf(k)khdaw.comInvestment,break-eveninvestmentk*k*k21CapitalperworkerThesteady-stategrowthrateoftotalincomeisn+g:thehigherthepopulationgrowthratenis,thehigherthegrowthrateoftotalincomeis.Incomeperworker,however,growsatrateginsteadystateand,thus,isnotaffectedbypopulationgrowth.ProblemsandApplications1.a.Aproductionfunctionhasconstantreturnstoscaleifincreasingallfactorsofpro-课后答案网ductionbyanequalpercentagecausesoutputtoincreasebythesamepercentage.Mathematically,aproductionfunctionhasconstantreturnstoscaleifzY=F(zK,zL)foranypositivenumberwww.hackshp.cnz.Thatis,ifwemultiplyboththeamountofcapitalandtheamountoflaborbysomeamountz,thentheamountofoutputismulti-pliedbyz.Forexample,ifwedoubletheamountsofcapitalandlaborweuse(set-tingz=2),thenoutputalsodoubles.1/21/2ToseeiftheproductionfunctionY=F(K,L)=KLhasconstantreturnstoscale,wewrite:1/21/21/21/2F(zK,zL)=(zK)(zL)=zKL=zY.1/21/2Therefore,theproductionfunctionY=KLhasconstantreturnstoscale.b.Tofindtheper-workerproductionfunction,dividetheproductionfunction1/21/2Y=KLbyL:1212YKL=.LLIfwedefiney=Y/L,wecanrewritetheaboveexpressionas:1/21/2y=K/L.Definingk=K/L,wecanrewritetheaboveexpressionas:1/2y=k.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 56AnswerstoTextbookQuestionsandProblemsc.WeknowthefollowingfactsaboutcountriesAandB:δ=depreciationrate=0.05,sa=savingrateofcountryA=0.1,sb=savingrateofcountryB=0.2,and1/2y=kistheper-workerproductionfunctionderivedinpart(b)forcountriesAandB.Thegrowthofthecapitalstock∆kequalstheamountofinvestmentsf(k),lesstheamountofdepreciationδk.Thatis,∆k=sf(k)–δk.Insteadystate,thecapitalstockdoesnotgrow,sowecanwritethisassf(k)=δk.Tofindthesteady-statelevelofcapitalperworker,plugtheper-workerpro-ductionfunctionintothesteady-stateinvestmentcondition,andsolvefork*:1/2sk=δk.Rewritingthis:1/2k=s/δ2khdaw.comk=(s/δ).Tofindthesteady-statelevelofcapitalperworkerk*,plugthesavingrateforeachcountryintotheaboveformula:*22CountryA:ka=(sa/δ)=(0.1/0.05)=4.*22CountryB:kb=(sb/δ)=(0.2/0.05)=16.Nowthatwehavefoundk*foreachcountry,wecancalculatethesteady-statelev-1/2elsofincomeperworkerforcountriesAandBbecauseweknowthaty=k:*1/2ya=(4)=2.*1/2y=(16)=4.bWeknowthatoutofeachdollarofincome,workerssaveafractionsandcon-sumeafraction(1–s).Thatis,theconsumptionfunctionisc=(1–s)y.Sinceweknowthesteady-statelevelsofincomeinthetwocountries,wefindCountryA:c*=(1–sa)y*=(1–0.1)(2)课后答案网aa=1.8.CountryB:c*=(1–sb)y*=(1–0.2)(4)www.hackshp.cnbb=3.2.d.Usingthefollowingfactsandequations,wecalculateincomeperworkery,con-sumptionperworkerc,andcapitalperworkerk:sa=0.1.sb=0.2.δ=0.05.ko=2forbothcountries.1/2y=k.c=(1–s)y.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter7EconomicGrowthI57CountryA1/2Yearky=kc=(1–sa)yi=sayδk∆k=i–δk121.4141.2730.1410.1000.04122.0411.4291.2860.1430.1020.04132.0821.4431.2990.1440.1040.04042.1221.4571.3110.1460.1060.04052.1021.4701.3230.1470.1080.039CountryB1/2khdaw.comYearky=kc=(1–sa)yi=sayδk∆k=i–δk121.4141.1310.2830.1000.18322.1831.4771.1820.2950.1090.18632.3691.5391.2310.3080.1180.19042.5591.6001.2800.3200.1280.19252.7511.6591.3270.3320.1380.194NotethatitwilltakefiveyearsbeforeconsumptionincountryBishigherthanconsumptionincountryA.2.a.TheproductionfunctionintheSolowgrowthmodelisY=F(K,L),orexpressedtermsofoutputperworker,y=f(k).Ifawarreducesthelaborforcethroughcasu-alties,thenLfallsbutk=K/Lrises.Theproductionfunctiontellsusthattotaloutputfallsbecausetherearefewerworkers.Outputperworkerincreases,howev-er,sinceeachworkerhasmorecapital.b.Thereductioninthelaborforcemeansthatthecapitalstockperworkerishigherafterthewar.Therefore,iftheeconomywereinasteadystatepriortothewar,课后答案网thenafterthewartheeconomyhasacapitalstockthatishigherthanthesteady-statelevel.ThisisshowninFigure7–2asanincreaseincapitalperworkerfromk*tok.Astheeconomyreturnstothesteadystate,thecapitalstockperworker1www.hackshp.cnfallsfromk1backtok*,sooutputperworkeralsofalls.(δ+n)kFFigure4-2igure7–2sf(k)Investment,break-eveninvestmentk*kk1Capitalperworkerkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 58AnswerstoTextbookQuestionsandProblemsHence,inthetransitiontothenewsteadystate,outputgrowthisslower.Inthesteadystate,weknowthattechnologicalprogressdeterminesthegrowthrateofoutputperworker.Oncetheeconomyreturnstothesteadystate,outputperworkerequalstherateoftechnologicalprogress—asitwasbeforethewar.3.a.WefollowSection7-1,“ApproachingtheSteadyState:ANumericalExample.”0.30.7TheproductionfunctionisY=KL.Toderivetheper-workerproductionfunc-tionf(k),dividebothsidesoftheproductionfunctionbythelaborforceL:0.307.YKL=.LLRearrangetoobtain:03.YK=.LLBecausey=Y/Landk=K/L,thisbecomes:0.3khdaw.comy=k.b.Recallthat∆k=sf(k)–δk.Thesteady-statevalueofcapitalk*isdefinedasthevalueofkatwhichcapitalstockisconstant,so∆k=0.Itfollowsthatinsteadystate0=sf(k)–δk,or,equivalently,k*s=.fk(*)δFortheproductionfunctioninthisproblem,itfollowsthat:k*s=.0.3课后答案网(*)kδRearranging:07.swww.hackshp.cn(*)k=,δor107/.sk*=δSubstitutingthisequationforsteady-statecapitalperworkerintotheper-workerproductionfunctionfrompart(a)gives:0307./.sy*=δConsumptionistheamountofoutputthatisnotinvested.Sinceinvestmentinthesteadystateequalsδk*,itfollowsthat0307./.107/.sscf*(=−=kk*)*δ−δδδkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter7EconomicGrowthI59(Note:Analternativeapproachtotheproblemistonotethatconsumptionalsoequalstheamountofoutputthatisnotsaved:0307./.03.scs*=−(111)(*)fks=−()(*)k=−(s)δSomealgebraicmanipulationshowsthatthisequationisequaltotheequationabove.)c.Thetablebelowshowsk*,y*,andc*forthesavingrateintheleftcolumn,usingtheequationsfrompart(b).Weassumeadepreciationrateof10percent(i.e.,0.1).(Thelastcolumnshowsthemarginalproductofcapital,derivedinpart(d)below).k*y*c*MPK00.000.000.000.11.001.000.900.300.22.691.351.080.150.34.801.601.120.10khdaw.com0.47.251.811.090.080.59.971.991.000.060.612.932.160.860.050.716.122.300.690.040.819.502.440.490.040.923.082.560.260.03126.832.680.000.03Notethatasavingrateof100percent(s=1.0)maximizesoutputperworker.Inthatcase,ofcourse,nothingiseverconsumed,soc*=0.Consumptionperwork-erismaximizedatarateofsavingof0.3percent—thatis,wheresequalscapital’sshareinoutput.ThisistheGoldenRulelevelofs.0.30.7d.WecandifferentiatetheproductionfunctionY=KLwithrespecttoKtofindthemarginalproductofcapital.Thisgives:0307..课后答案网KLYyMPK==03..03=03..KKkThetableinpart(c)showsthemarginalproductofcapitalforeachvalueofthewww.hackshp.cnsavingrate.(NotethattheappendixtoChapter3derivedtheMPKforthegeneralCobb–Douglasproductionfunction.Theequationabovecorrespondstothespecialcasewhereαequals0.3.)4.Supposetheeconomybeginswithaninitialsteady-statecapitalstockbelowtheGoldenRulelevel.Theimmediateeffectofdevotingalargershareofnationaloutputtoinvest-mentisthattheeconomydevotesasmallersharetoconsumption;thatis,“livingstan-dards”asmeasuredbyconsumptionfall.Thehigherinvestmentratemeansthatthecapitalstockincreasesmorequickly,sothegrowthratesofoutputandoutputperworkerrise.Theproductivityofworkersistheaverageamountproducedbyeachwork-er—thatis,outputperworker.Soproductivitygrowthrises.Hence,theimmediateeffectisthatlivingstandardsfallbutproductivitygrowthrises.Inthenewsteadystate,outputgrowsatraten+g,whileoutputperworkergrowsatrateg.Thismeansthatinthesteadystate,productivitygrowthisindependentoftherateofinvestment.Sincewebeginwithaninitialsteady-statecapitalstockbelowtheGoldenRulelevel,thehigherinvestmentratemeansthatthenewsteadystatehasahigherlevelofconsumption,solivingstandardsarehigher.Thus,anincreaseintheinvestmentrateincreasestheproductivitygrowthrateintheshortrunbuthasnoeffectinthelongrun.Livingstandards,ontheotherhand,fallkhdaw.comimmediatelyandonlyriseovertime.Thatis,thequotationemphasizesgrowth,butnotthesacrificerequiredtoachieveit.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 60AnswerstoTextbookQuestionsandProblems5.Asinthetext,letk=K/Lstandforcapitalperunitoflabor.Theequationfortheevolu-tionofkis∆k=Saving–(δ+n)k.Ifallcapitalincomeissavedandifcapitalearnsitsmarginalproduct,thensavingequalsMPK×k.Wecansubstitutethisintotheaboveequationtofind∆k=MPK×k–(δ+n)k.Inthesteadystate,capitalperefficiencyunitofcapitaldoesnotchange,so∆k=0.Fromtheaboveequation,thistellsusthatMPK×k=(δ+n)k,orMPK=(δ+n).Equivalently,MPK–δ=n.khdaw.comInthiseconomy’ssteadystate,thenetmarginalproductofcapital,MPK–δ,equalstherateofgrowthofoutput,n.ButthisconditiondescribestheGoldenRulesteadystate.Hence,weconcludethatthiseconomyreachestheGoldenRulelevelofcapitalaccumu-lation.6.First,considersteadystates.InFigure7–3,theslowerpopulationgrowthrateshiftsthelinerepresentingpopulationgrowthanddepreciationdownward.Thenewsteadystatehasahigherlevelofcapitalperworker,k*,andhenceahigherlevelofoutputper2worker.(δ+n)kFigure4-3Figure7–31(δ+n)k2sf(k)课后答案网www.hackshp.cnInvestment,break-eveninvestmentk*k*k12CapitalperworkerWhataboutsteady-stategrowthrates?Insteadystate,totaloutputgrowsatraten+g,whereasoutputper-persongrowsatrateg.Hence,slowerpopulationgrowthwilllowertotaloutputgrowth,butper-personoutputgrowthwillbethesame.Nowconsiderthetransition.Weknowthatthesteady-statelevelofoutputperpersonishigherwithlowpopulationgrowth.Hence,duringthetransitiontothenewsteadystate,outputperpersonmustgrowataratefasterthangforawhile.Inthedecadesafterthefallinpopulationgrowth,growthintotaloutputwillfallwhilegrowthinoutputperpersonwillrise.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter7EconomicGrowthI617.Iftherearedecreasingreturnstolaborandcapital,thenincreasingbothcapitalandlaborbythesameproportionincreasesoutputbylessthanthisproportion.Forexam-ple,ifwedoubletheamountsofcapitalandlabor,thenoutputlessthandoubles.Thismayhappenifthereisafixedfactorsuchaslandintheproductionfunction,anditbecomesscarceastheeconomygrowslarger.Thenpopulationgrowthwillincreasetotaloutputbutdecreaseoutputperworker,sinceeachworkerhaslessofthefixedfac-tortoworkwith.Ifthereareincreasingreturnstoscale,thendoublinginputsofcapitalandlabormorethandoublesoutput.Thismayhappenifspecializationoflaborbecomesgreateraspopulationgrows.Thenpopulationgrowthincreasestotaloutputandalsoincreasesoutputperworker,sincetheeconomyisabletotakeadvantageofthescaleeconomymorequickly.8.a.Tofindoutputpercapitaywedividetotaloutputbythenumberofworkers:α−αku[](*1−)Ly=Lkhdaw.comαK1−α=(*1−u)Lαα1−=−ku(*1),Kwherethefinalstepusesthedefinitionk=.NoticethatunemploymentreducesLtheamountofpercapitaoutputforanygivencapital–personratiobecausesomeofthepeoplearenotproducinganything.Thesteadystateisthelevelofcapitalperpersonatwhichtheincreaseincapitalpercapitafrominvestmentequalsitsdecreasefromdepreciationandpop-ulationgrowth(seeChapter4formoredetails).sy*=+()δnk**α1–α课后答案网sk(1–u)=(δ+n)k*1s1−αku*(*=−1)www.hackshp.cnδ+nUnemploymentlowersthemarginalproductofcapitaland,hence,actslikeaneg-ativetechnologicalshockthatreducestheamountofcapitaltheeconomycanreproduceinsteadystate.Figure7–4showsthisgraphically:anincreaseinunem-ploymentlowersthesf(k)lineandthesteady-statelevelofcapitalperperson.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 62AnswerstoTextbookQuestionsandProblemsFigure7–4(δ+n)ksf(k,u1*)sf(k,u2*)khdaw.comInvestment,Break-eveninvestmentk*k*21CapitalperpersonFinally,togetsteady-stateoutputplugthesteady-statelevelofcapitalintotheproductionfunction:α1s1−α1−αyu*(*=−11)(*−u)δ+n课后答案网αs1−α=−(*1u)www.hackshp.cnδ+nUnemploymentlowersoutputfortworeasons:foragivenk,unemploymentlowersy,andunemploymentalsolowersthesteady-statevaluek*.b.Figure7–5belowshowsthepatternofoutputovertime.Assoonasunemploy-mentfallsfromu1tou2,outputjumpsupfromitsinitialsteady-statevalueofy*(u1).Theeconomyhasthesameamountofcapital(sinceittakestimetoadjustthecapitalstock),butthiscapitaliscombinedwithmoreworkers.Atthatmomenttheeconomyisoutofsteadystate:ithaslesscapitalthanitwantstomatchtheincreasednumberofworkersintheeconomy.Theeconomybeginsitstransitionbyaccumulatingmorecapital,raisingoutputevenfurtherthantheoriginaljump.Eventuallythecapitalstockandoutputconvergetotheirnew,highersteady-statelevels.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter7EconomicGrowthI63Figure7–5yy*(u2∗)y*(u*)1u*tfalls9.Thereisnouniquewaytofindthedatatoanswerthisquestion.Forexample,fromthekhdaw.comWorldBankwebsite,Ifollowedlinksto"DataandStatistics."Ithenfollowedalinkto"QuickReferenceTables"(http://www.worldbank.org/data/databytopic/GNPPC.pdf)tofindasummarytableofincomepercapitaacrosscountries.(Notethattherearesomesubtleissuesinconvertingcurrencyvaluesacrosscountriesthatarebeyondthescopeofthisbook.ThedatainTable7–1usewhatarecalled“purchasingpowerparity.”)Asanexample,IchosetocomparetheUnitedStates(incomeperpersonof$31,900in1999)andPakistan($1,860),witha17-folddifferenceinincomeperperson.Howcanwedecidewhatfactorsaremostimportant?Asthetextnotes,differencesinincomemustcomefromdifferencesincapital,labor,and/ortechnology.TheSolowgrowthmodelgivesusaframeworkforthinkingabouttheimportanceofthesefactors.Onecleardifferenceacrosscountriesisineducationalattainment.Onecanthinkaboutdifferencesineducationalattainmentasreflectingdifferencesinbroad“humancapital”(analogoustophysicalcapital)orasdifferencesintheleveloftechnology(e.g.,ifyourworkforceismoreeducated,thenyoucanimplementbettertechnologies).Forourpurposes,wewillthinkofeducationasreflecting“technology,”inthatitallowsmoreoutputperworkerforanygivenlevelofphysicalcapitalperworker.课后答案网FromtheWorldBankwebsite(countrytables)Ifoundthefollowingdata(down-loadedFebruary2002):www.hackshp.cnLaborForceInvestment/GDPIlliteracyGrowth(1990)(percentof(1994–2000)(percent)population15+)UnitedStates1.5180Pakistan3.01954Howcanwedecidewhichfactorexplainsthemost?Itseemsunlikelythatthesmalldifferenceininvestment/GDPexplainsthelargedifferenceinpercapitalincome,leavinglabor-forcegrowthandilliteracy(or,moregenerally,technology)asthelikelyculprits.ButwecanbemoreformalaboutthisusingtheSolowmodel.WefollowSection7-1,“ApproachingtheSteadyState:ANumericalExample.”Forthemoment,weassumethetwocountrieshavethesameproductiontechnology:0.50.5Y=KL.(Thiswillallowustodecidewhetherdifferencesinsavingandpopulationgrowthcanexplainthedifferencesinincomepercapita;ifnot,thendifferencesintech-nologywillremainasthelikelyexplanation.)Asinthetext,wecanexpressthisequa-tionintermsoftheper-workerproductionfunctionf(k):khdaw.comy=k0.5.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 64AnswerstoTextbookQuestionsandProblemsInsteady-state,weknowthat∆δks=−fknk()(+).Thesteady-statevalueofcapitalk*isdefinedasthevalueofkatwhichcapitalstockisconstant,so∆k=0.Itfollowsthatinsteadystate0=−sfk()(n+δ)k,or,equivalently,k*s=.fk(*)n+δFortheproductionfunctioninthisproblem,itfollowsthat:k*s=,05.()k*n+δRearranging:05.s()k*,=khdaw.comn+δor2sk*.=n+δSubstitutingthisequationforsteady-statecapitalperworkerintotheper-workerproductionfunctiongives:sy*.=n+δIfweassumethattheUnitedStatesandPakistanareinsteadystateandhavethesameratesofdepreciation—say,5percent—thentheratioofincomepercapitainthetwocountriesis:ysn+005.USUSPakistan=ysn+005.课后答案网ParkistanPakistanUSThisequationtellsusthatif,say,theU.S.savingratehadbeentwicePakistan"ssavingwww.hackshp.cnrate,thenU.S.incomeperworkerwouldbetwicePakistan"slevel(otherthingsequal).Clearly,giventhattheU.S.has17-timeshigherincomeperworkerbutverysimilarlevelsofinvestmentrelativetoGDP,thisvariableisnotamajorfactorinthecompari-son.Evenpopulationgrowthcanonlyexplainafactorof1.2(0.08/0.065)differenceinlevelsofoutputperworker.Theremainingculpritistechnology,andthehighlevelofilliteracyinPakistanisconsistentwiththisconclusion.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER8EconomicGrowthIIQuestionsforReview1.IntheSolowmodel,wefindthatonlytechnologicalprogresscanaffectthesteady-staterateofgrowthinincomeperworker.Growthinthecapitalstock(throughhighsaving)hasnoeffectonthesteady-stategrowthrateofincomeperworker;neitherdoespopula-tiongrowth.Buttechnologicalprogresscanleadtosustainedgrowth.2.TodecidewhetheraneconomyhasmoreorlesscapitalthantheGoldenRule,weneedtocomparethemarginalproductofcapitalnetofdepreciation(MPK–δ)withthegrowthrateoftotaloutput(n+g).ThegrowthrateofGDPisreadilyavailable.Estimatingthenetmarginalproductofcapitalrequiresalittlemoreworkbut,asshowninthetext,canbebackedoutofavailabledataonthecapitalstockrelativetokhdaw.comGDP,thetotalamountofdepreciationrelativetoGDP,andcapital’sshareinGDP.3.Economicpolicycaninfluencethesavingratebyeitherincreasingpublicsavingorpro-vidingincentivestostimulateprivatesaving.Publicsavingisthedifferencebetweengovernmentrevenueandgovernmentspending.Ifspendingexceedsrevenue,thegov-ernmentrunsabudgetdeficit,whichisnegativesaving.Policiesthatdecreasethedeficit(suchasreductionsingovernmentpurchasesorincreasesintaxes)increasepub-licsaving,whereaspoliciesthatincreasethedeficitdecreasesaving.Avarietyofgov-ernmentpoliciesaffectprivatesaving.Thedecisionbyahouseholdtosavemaydependontherateofreturn;thegreaterthereturntosaving,themoreattractivesavingbecomes.Taxincentivessuchastax-exemptretirementaccountsforindividualsandinvestmenttaxcreditsforcorporationsincreasetherateofreturnandencouragepri-vatesaving.4.Therateofgrowthofoutputperpersonslowedworldwideafter1972.Thisslowdownappearstoreflectaslowdowninproductivitygrowth—therateatwhichtheproductionfunctionisimprovingovertime.Variousexplanationshavebeenproposed,buttheslowdownremainsamystery.Inthesecondhalfofthe1990s,productivitygrewmore课后答案网quicklyagainintheUnitedStatesand,itappears,afewothercountries.Manycom-mentatorsattributetheproductivityrevivaltotheeffectsofinformationtechnology.5.Endogenousgrowththeoriesattempttoexplaintherateoftechnologicalprogressbywww.hackshp.cnexplainingthedecisionsthatdeterminethecreationofknowledgethroughresearchanddevelopment.Bycontrast,theSolowmodelsimplytookthisrateasexogenous.IntheSolowmodel,thesavingrateaffectsgrowthtemporarily,butdiminishingreturnstocapitaleventuallyforcetheeconomytoapproachasteadystateinwhichgrowthdependsonlyonexogenoustechnologicalprogress.Bycontrast,manyendogenousgrowthmodelsinessenceassumethatthereareconstant(ratherthandiminishing)returnstocapital,interpretedtoincludeknowledge.Hence,changesinthesavingratecanleadtopersistentgrowth.khdaw.com65若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 66AnswerstoTextbookQuestionsandProblemsProblemsandApplications1.a.Tosolveforthesteady-statevalueofyasafunctionofs,n,g,andδ,webeginwiththeequationforthechangeinthecapitalstockinthesteadystate:∆k=sf(k)–(δ+n+g)k=0.2Theproductionfunctiony=√kcanalsoberewrittenasy=k.Pluggingthispro-ductionfunctionintotheequationforthechangeinthecapitalstock,wefindthatinthesteadystate:2sy–(δ+n+g)y=0.Solvingthis,wefindthesteady-statevalueofy:y*=s/(δ+n+g).b.Thequestionprovidesuswiththefollowinginformationabouteachcountry:Developedcountry:s=0.28Less-developedcountry:s=0.10khdaw.comn=0.01n=0.04g=0.02g=0.02δ=0.04δ=0.04Usingtheequationfory*thatwederivedinpart(a),wecancalculatethesteady-statevaluesofyforeachcountry.Developedcountry:y*=0.28/(0.04+0.01+0.02)=4.Less-developedcountry:y*=0.10/(0.04+0.04+0.02)=1.c.Theequationfory*thatwederivedinpart(a)showsthattheless-developedcoun-trycouldraiseitslevelofincomebyreducingitspopulationgrowthratenorbyincreasingitssavingrates.Policiesthatreducepopulationgrowthincludeintro-ducingmethodsofbirthcontrolandimplementingdisincentivesforhavingchil-dren.PoliciesthatincreasethesavingrateincludeincreasingpublicsavingbyreducingthebudgetdeficitandintroducingprivatesavingincentivessuchasI.R.A.’sandothertaxconcessionsthatincreasethereturntosaving.课后答案网2.Tosolvethisproblem,itisusefultoestablishwhatweknowabouttheU.S.economy:αACobb–Douglasproductionfunctionhastheformy=k,whereαiscapital’sshareofincome.Thequestiontellsusthatwww.hackshp.cnα=0.3,soweknowthattheproductionfunctionis0.3y=k.Inthesteadystate,weknowthatthegrowthrateofoutputequals3percent,soweknowthat(n+g)=0.03.Thedepreciationrateδ=0.04.Thecapital–outputratioK/Y=2.5.Becausek/y=[K/(L×E)]/[Y/(L×E)]=K/Y,wealsoknowthatk/y=2.5.(Thatis,thecapital–outputratioisthesameintermsofeffec-tiveworkersasitisinlevels.)a.Beginwiththesteady-statecondition,sy=(δ+n+g)k.Rewritingthisequationleadstoaformulaforsavinginthesteadystate:s=(δ+n+g)(k/y).Plugginginthevaluesestablishedabove:s=(0.04+0.03)(2.5)=0.175.Theinitialsavingrateis17.5percent.b.WeknowfromChapter3thatwithaCobb–Douglasproductionfunction,capital’sshareofincomeα=MPK(K/Y).Rewriting,wehave:khdaw.comMPK=α/(K/Y).若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter8EconomicGrowthII67Plugginginthevaluesestablishedabove,wefind:MPK=0.3/2.5=0.12.c.WeknowthatattheGoldenRulesteadystate:MPK=(n+g+δ).Plugginginthevaluesestablishedabove:MPK=(0.03+0.04)=0.07.AttheGoldenRulesteadystate,themarginalproductofcapitalis7percent,whereasitis12percentintheinitialsteadystate.Hence,fromtheinitialsteadystateweneedtoincreasektoachievetheGoldenRulesteadystate.d.WeknowfromChapter3thatforaCobb–Douglasproductionfunction,MPK=α(Y/K).Solvingthisforthecapital–outputratio,wefind:K/Y=α/MPK.WecansolvefortheGoldenRulecapital–outputratiousingthisequation.Ifwekhdaw.compluginthevalue0.07fortheGoldenRulesteady-statemarginalproductofcapi-tal,andthevalue0.3forα,wefind:K/Y=0.3/0.07=4.29.IntheGoldenRulesteadystate,thecapital–outputratioequals4.29,comparedtothecurrentcapital–outputratioof2.5.e.Weknowfrompart(a)thatinthesteadystates=(δ+n+g)(k/y),wherek/yisthesteady-statecapital–outputratio.Intheintroductiontothisanswer,weshowedthatk/y=K/Y,andinpart(d)wefoundthattheGoldenRuleK/Y=4.29.Plugginginthisvalueandthoseestablishedabove:s=(0.04+0.03)(4.29)=0.30.ToreachtheGoldenRulesteadystate,thesavingratemustrisefrom17.5to30percent.3.a.Inthesteadystate,weknowthat课后答案网sy=(δ+n+g)k.Thisimpliesthatk/y=s/(δ+n+g).Sinces,δ,n,andwww.hackshp.cngareconstant,thismeansthattheratiok/yisalsoconstant.Sincek/y=[K/(L×E)]/[Y/(L×E)]=K/Y,wecanconcludethatinthesteadystate,thecapital–outputratioisconstant.b.Weknowthatcapital’sshareofincome=MPK×(K/Y).Inthesteadystate,weknowfrompart(a)thatthecapital–outputratioK/Yisconstant.WealsoknowfromthehintthattheMPKisafunctionofk,whichisconstantinthesteadystate;thereforetheMPKitselfmustbeconstant.Thus,capital’sshareofincomeisconstant.Labor’sshareofincomeis1–[capital’sshare].Hence,ifcapital’sshareisconstant,weseethatlabor’sshareofincomeisalsoconstant.c.Weknowthatinthesteadystate,totalincomegrowsatn+g—therateofpopula-tiongrowthplustherateoftechnologicalchange.Inpart(b)weshowedthatlabor’sandcapital’sshareofincomeisconstant.Ifthesharesareconstant,andtotalincomegrowsattheraten+g,thenlaborincomeandcapitalincomemustalsogrowattheraten+g.d.DefinetherealrentalpriceofcapitalRas:R=TotalCapitalIncome/CapitalStock=(MPK×K)/K=MPK.Weknowthatinthesteadystate,theMPKisconstantbecausecapitalpereffec-khdaw.comtiveworkerkisconstant.Therefore,wecanconcludethattherealrentalpriceofcapitalisconstantinthesteadystate.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 68AnswerstoTextbookQuestionsandProblemsToshowthattherealwagewgrowsattherateoftechnologicalprogressg,define:TLI=TotalLaborIncome.L=LaborForce.Usingthehintthattherealwageequalstotallaborincomedividedbythelaborforce:w=TLI/L.Equivalently,wL=TLI.Intermsofpercentagechanges,wecanwritethisas∆w/w+∆L/L=∆TLI/TLI.Thisequationsaysthatthegrowthrateoftherealwageplusthegrowthrateofthelaborforceequalsthegrowthrateoftotallaborincome.Weknowthatthekhdaw.comlaborforcegrowsatraten,andfrompart(c)weknowthattotallaborincomegrowsatraten+g.Wethereforeconcludethattherealwagegrowsatrateg.4.HowdodifferencesineducationacrosscountriesaffecttheSolowmodel?Educationisonefactoraffectingtheefficiencyoflabor,whichwedenotedbyE.(Otherfactorsaffect-ingtheefficiencyoflaborincludelevelsofhealth,skill,andknowledge.)Sincecountry1hasamorehighlyeducatedlaborforcethancountry2,eachworkerincountry1ismoreefficient.Thatis,E1>E2.Wewillassumethatbothcountriesareinsteadystate.a.IntheSolowgrowthmodel,therateofgrowthoftotalincomeisequalton+g,whichisindependentoftheworkforce’slevelofeducation.Thetwocountrieswill,thus,havethesamerateofgrowthoftotalincomebecausetheyhavethesamerateofpopulationgrowthandthesamerateoftechnologicalprogress.b.Becausebothcountrieshavethesamesavingrate,thesamepopulationgrowthrate,andthesamerateoftechnologicalprogress,weknowthatthetwocountrieswillconvergetothesamesteady-statelevelofcapitalperefficiencyunitoflabork*.ThisisshowninFigure8–1.课后答案网(δ+n+g)kFigure8–1www.hackshp.cnsf(k)Investment,break-eveninvestment*kkCapitalperefficiencyunitHence,outputperefficiencyunitoflaborinthesteadystate,whichisy*=f(k*),isthesameinbothcountries.Buty*=Y/(L×E)orY/L=y*E.Weknowthaty*willbethesameinbothcountries,butthatE1>Ekhdaw.com2.Therefore,y*E1>y*E2.This若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter8EconomicGrowthII69impliesthat(Y/L)1>(Y/L)2.Thus,thelevelofincomeperworkerwillbehigherinthecountrywiththemoreeducatedlaborforce.c.WeknowthattherealrentalpriceofcapitalRequalsthemarginalproductofcap-ital(MPK).ButtheMPKdependsonthecapitalstockperefficiencyunitoflabor.Inthesteadystate,bothcountrieshavek*=k*=k*becausebothcountrieshave12thesamesavingrate,thesamepopulationgrowthrate,andthesamerateoftech-nologicalprogress.Therefore,itmustbetruethatR1=R2=MPK.Thus,therealrentalpriceofcapitalisidenticalinbothcountries.d.Outputisdividedbetweencapitalincomeandlaborincome.Therefore,thewageperefficiencyunitoflaborcanbeexpressedas:w=f(k)–MPK•k.Asdiscussedinparts(b)and(c),bothcountrieshavethesamesteady-statecapitalstockkandthesameMPK.Therefore,thewageperefficiencyunitinthetwocountriesisequal.Workers,however,careaboutthewageperunitoflabor,notthewageperefficiencyunit.Also,wecanobservethewageperunitoflaborbutnotthewagekhdaw.comperefficiencyunit.ThewageperunitoflaborisrelatedtothewageperefficiencyunitoflaborbytheequationWageperUnitofL=wE.Thus,thewageperunitoflaborishigherinthecountrywiththemoreeducatedlaborforce.5.a.Inthetwo-sectorendogenousgrowthmodelinthetext,theproductionfunctionformanufacturedgoodsisY=F(K,(1–u)EL).Weassumedinthismodelthatthisfunctionhasconstantreturnstoscale.AsinSection3-1,constantreturnsmeansthatforanypositivenumberz,zY=F(zK,z(1–u)EL).Settingz=1/EL,weobtain:YK=−F,(1u).ELELUsingourstandarddefinitionsof课后答案网yasoutputpereffectiveworkerandkascapitalpereffectiveworker,wecanwritethisaswww.hackshp.cny=F(k,(1–u)).b.Tobegin,notethatfromtheproductionfunctioninresearchuniversities,thegrowthrateoflaborefficiency,∆E/E,equalsg(u).WecannowfollowthelogicofSection8-1,substitutingthefunctiong(u)fortheconstantgrowthrateg.Inordertokeepcapitalpereffectiveworker(K/EL)constant,break-eveninvestmentincludesthreeterms:δkisneededtoreplacedepreciatingcapital,nkisneededtoprovidecapitalfornewworkers,andg(u)isneededtoprovidecapitalforthegreaterstockofknowledgeEcreatedbyresearchuniversities.Thatis,break-eveninvestmentis(δ+n+g(u))k.c.AgainfollowingthelogicofSection8-1,thegrowthofcapitalpereffectiveworkeristhedifferencebetweensavingpereffectiveworkerandbreak-eveninvestmentpereffectiveworker.Wenowsubstitutetheper-effective-workerproductionfunc-tionfrompart(a),andthefunctiong(u)fortheconstantgrowthrateg,toobtain:∆k=sF(k,(1–u))–(δ+n+g(u))k.Inthesteadystate,∆k=0,sowecanrewritetheequationaboveas:sF(k,(1–u))=(δ+n+g(u))kkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 70AnswerstoTextbookQuestionsandProblemsAsinouranalysisoftheSolowmodel,foragivenvalueofuwecanplottheleft-andright-handsidesofthisequation:Figure8–2[δ+n+g(u)]ksF(k,1–u)khdaw.comInvestment,break-eveninvestmentCapitalpereffectiveworkerThesteadystateisgivenbytheintersectionofthetwocurves.d.ThesteadystatehasconstantcapitalpereffectiveworkerkasgivenbyFigure8–2above.Wealsoassumethatinthesteadystate,thereisaconstantshareoftimespentinresearchuniversities,souisconstant.(Afterall,ifuwerenotcon-stant,itwouldn’tbea“steady”state!).Hence,outputpereffectiveworkeryisalsoconstant.OutputperworkerequalsyE,andEgrowsatrateg(u).Therefore,out-putperworkergrowsatrateg(u).Thesavingratedoesnotaffectthisgrowthrate.However,theamountoftimespentinresearchuniversitiesdoesaffectthisrate:asmoretimeisspentinresearchuniversities,thesteady-stategrowthraterises.e.Anincreaseinushiftsbothlinesinourfigure.Outputpereffectiveworkerfallsforanygivenlevelofcapitalpereffectiveworker,sincelessofeachworker’stimeisspentproducingmanufacturedgoods.Thisistheimmediateeffectofthe课后答案网change,sinceatthetimeurises,thecapitalstockKandtheefficiencyofeachworkerEareconstant.Sinceoutputpereffectiveworkerfalls,thecurveshowingsavingpereffectiveworkershiftsdown.www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter8EconomicGrowthII71Atthesametime,theincreaseintimespentinresearchuniversitiesincreas-esthegrowthrateoflaborefficiencyg(u).Hence,break-eveninvestment[whichwefoundaboveinpart(b)]risesatanygivenlevelofk,sothelineshowingbreak-eveninvestmentalsoshiftsup.Figure8–3belowshowstheseshifts:Figure8–3[δ+n+g(u)]k2[δ+n+g(u)]k1sF(k,1–u)1AsF(k,1–u)2khdaw.comBInvestment,break-eveninvestmentkk21CapitalpereffectiveworkerInthenewsteadystate,capitalpereffectiveworkerfallsfromk1tok2.Outputpereffectiveworkeralsofalls.f.Intheshortrun,theincreaseinuunambiguouslydecreasesconsumption.Afterall,wearguedinpart(e)thattheimmediateeffectistodecreaseoutput,sinceworkersspendlesstimeproducingmanufacturinggoodsandmoretimeinresearchuniversitiesexpandingthestockofknowledge.Foragivensavingrate,thedecreaseinoutputimpliesadecreaseinconsumption.课后答案网Thelong-runsteady-stateeffectismoresubtle.Wefoundinpart(e)thatout-putpereffectiveworkerfallsinthesteadystate.Butwelfaredependsonoutput(andconsumption)perwww.hackshp.cnworker,notpereffectiveworker.TheincreaseintimespentinresearchuniversitiesimpliesthatEgrowsfaster.Thatis,outputperworkerequalsyE.Althoughsteady-stateyfalls,inthelongrunthefastergrowthrateofEnecessarilydominates.Thatis,inthelongrun,consumptionunambiguouslyrises.Nevertheless,becauseoftheinitialdeclineinconsumption,theincreaseinuisnotunambiguouslyagoodthing.Thatis,apolicymakerwhocaresmoreaboutcurrentgenerationsthanaboutfuturegenerationsmaydecidenottopursueapol-icyofincreasingu.(ThisisanalogoustothequestionconsideredinChapter7ofwhetherapolicymakershouldtrytoreachtheGoldenRulelevelofcapitalpereffectiveworkerifkiscurrentlybelowtheGoldenRulelevel.)khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 72AnswerstoTextbookQuestionsandProblemsMoreProblemsandApplicationstoChapter81.a.Thegrowthintotaloutput(Y)dependsonthegrowthratesoflabor(L),capital(K),andtotalfactorproductivity(A),assummarizedbytheequation:∆Y/Y=α∆K/K+(1–α)∆L/L+∆A/A,whereαiscapital’sshareofoutput.Wecanlookattheeffectonoutputofa5-per-centincreaseinlaborbysetting∆K/K=∆A/A=0.Sinceα=2/3,thisgivesus∆Y/Y=(1/3)(5%)=1.67%.A5-percentincreaseinlaborinputincreasesoutputby1.67percent.LaborproductivityisY/L.Wecanwritethegrowthrateinlaborproductivityas∆(Y/L)∆Y∆L=–.Y/LYLkhdaw.comSubstitutingforthegrowthinoutputandthegrowthinlabor,wefind∆(Y/L)/(Y/L)=1.67%–5.0%=–3.34%.Laborproductivityfallsby3.34percent.Tofindthechangeintotalfactorproductivity,weusetheequation∆A/A=∆Y/Y–α∆K/K–(1–α)∆L/L.Forthisproblem,wefind∆A/A=1.67%–0–(1/3)(5%)=0.Totalfactorproductivityistheamountofoutputgrowththatremainsafterwehaveaccountedforthedeterminantsofgrowththatwecanmeasure.Inthiscase,thereisnochangeintechnology,soalloftheoutputgrowthisattributabletomeasuredinputgrowth.Thatis,totalfactorproductivitygrowthiszero,asexpect-ed.课后答案网b.Betweenyears1and2,thecapitalstockgrowsby1/6,laborinputgrowsby1/3,andoutputgrowsby1/6.Weknowthatthegrowthintotalfactorproductivityisgivenbywww.hackshp.cn∆A/A=∆Y/Y–α∆K/K–(1–α)∆L/L.Substitutingthenumbersabove,andsettingα=2/3,wefind∆A/A=(1/6)–(2/3)(1/6)–(1/3)(1/3)=3/18–2/18–2/18=–1/18=–.056.Totalfactorproductivityfallsby1/18,orapproximately5.6percent.2.Bydefinition,outputYequalslaborproductivityY/LmultipliedbythelaborforceL:Y=(Y/L)L.Usingthemathematicaltrickinthehint,wecanrewritethisas∆Y∆(Y/L)∆L=+.YY/LLWecanrearrangethisas∆(Y/L)∆Y∆L=–.khdaw.comY/LYL若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter8EconomicGrowthII73Substitutingfor∆Y/Yfromthetext,wefind∆(Y/L)∆Aα∆K∆L∆L=++(1–α)–Y/LAKLL∆Aα∆Kα∆L=+–AKL∆A∆∆KL=+α−.AKLUsingthesametrickweusedabove,wecanexpresstheterminbracketsas∆K/K–∆L/L=∆(K/L)/(K/L).Makingthissubstitutionintheequationforlaborproductivitygrowth,weconcludethat∆(Y/L)∆Aα∆(K/L)=+.Y/LAK/Lkhdaw.com3.Weknowthefollowing:∆Y/Y=n+g=3%∆K/K=n+g=3%∆L/L=n=1%Capital’sshare=α=0.3Labor’sshare=1–α=0.7.Usingthesefacts,wecaneasilyfindthecontributionsofeachofthefactors,andthenfindthecontributionoftotalfactorproductivitygrowth,usingthefollowingequa-tions:OutputCapital’sLabor’sTotalFactor=++GrowthContributionContributionProductivity∆Yα∆K(1–α)∆L∆AYKLA3.0%课后答案网=(0.3)(3%)+(0.7)(1%)+∆A/AWecaneasilysolvethisfor∆A/A,tofindthat3.0%=www.hackshp.cn0.9%+0.7%+1.4%.Weconcludethatthecontributionofcapitalis0.9%peryear,thecontributionoflaboris0.7%peryear,andthecontributionoftotalfactorproductivitygrowthis1.4%peryear.ThesenumbersarequalitativelysimilartotheonesinTable8–3inthetextfortheUnitedStatesalthoughinTable8–3,capitalandlaborcontributemoreandTFPcontributedlessfrom1950–1999.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER9IntroductiontoEconomicFluctuationsQuestionsforReview1.Thepriceofamagazineisanexampleofapricethatisstickyintheshortrunandflex-ibleinthelongrun.Economistsdonothaveadefinitiveanswerastowhymagazinepricesarestickyintheshortrun.Perhapscustomerswouldfinditinconvenientifthepriceofamagazinetheypurchasechangedeverymonth.2.Aggregatedemandistherelationbetweenthequantityofoutputdemandedandtheaggregatepricelevel.Tounderstandwhytheaggregatedemandcurveslopesdown-ward,weneedtodevelopatheoryofaggregatedemand.Onesimpletheoryofaggregatedemandisbasedonthequantitytheoryofmoney.Writethequantityequationintermsofthesupplyanddemandforrealmoneybalancesasdkhdaw.comM/P=(M/P)=kY,wherek=1/V.ThisequationtellsusthatforanyfixedmoneysupplyM,anegativerelationshipexistsbetweenthepricelevelPandoutputY,assumingthatvelocityVisfixed:thehigherthepricelevel,thelowerthelevelofrealbalancesand,therefore,thelowerthequantityofgoodsandservicesdemandedY.Inotherwords,theaggregatedemandcurveslopesdownward,asinFigure9–1.PFigure9–1Pricelevel课后答案网www.hackshp.cnADYIncome,outputOnewaytounderstandthisnegativerelationshipbetweenthepricelevelandout-putistonotethelinkbetweenmoneyandtransactions.IfweassumethatViscon-stant,thenthemoneysupplydeterminesthedollarvalueofalltransactions:MV=PY.Anincreaseinthepricelevelimpliesthateachtransactionrequiresmoredollars.Fortheaboveidentitytoholdwithconstantvelocity,thequantityoftransactionsandthusthequantityofgoodsandservicespurchasedYmustfall.3.IftheFedincreasesthemoneysupply,thentheaggregatedemandcurveshiftsout-ward,asinFigure9–2.Intheshortrun,pricesaresticky,sotheeconomymovesalongkhdaw.com74若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter9IntroductiontoEconomicFluctuations75theshort-runaggregatesupplycurvefrompointAtopointB.OutputrisesaboveitsnaturalratelevelY:theeconomyisinaboom.Thehighdemand,however,eventuallycauseswagesandpricestoincrease.ThisgradualincreaseinpricesmovestheeconomyalongthenewaggregatedemandcurveAD2topointC.Atthenewlong-runequilibri-um,outputisatitsnatural-ratelevel,butpricesarehigherthantheywereintheini-tialequilibriumatpointA.PLRASFigure9–2PC2BPricelevelP1SRASkhdaw.comAADAD2AD1YYY2Income,output4.ItiseasierfortheFedtodealwithdemandshocksthanwithsupplyshocksbecausetheFedcanreduceoreveneliminatetheimpactofdemandshocksonoutputbycontrollingthemoneysupply.Inthecaseofasupplyshock,however,thereisnowayfortheFedtoadjustaggregatedemandtomaintainbothfullemploymentandastablepricelevel.Tounderstandwhythisistrue,considerthepolicyoptionsavailabletotheFedineachcase.Supposethatademandshock(suchastheintroductionofautomaticteller课后答案网machines,whichreducemoneydemand)shiftstheaggregatedemandcurveoutward,asinFigure9–3.OutputincreasesintheshortruntoY2.Inthelongrunoutputreturnstothenatural-ratelevel,butatahigherpricelevelwww.hackshp.cnP2.TheFedcanoffsetthisincreaseinvelocity,however,byreducingthemoneysupply;thisreturnstheaggregatePLRASFigure9–3CP2BPricelevelPSRAS1AAD2AD1YYYkhdaw.com2Income,output若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 76AnswerstoTextbookQuestionsandProblemsdemandcurvetoitsinitialposition,AD1.TotheextentthattheFedcancontrolthemoneysupply,itcanreduceoreveneliminatetheimpactofdemandshocksonoutput.Nowconsiderhowanadversesupplyshock(suchasacropfailureoranincreaseinunionaggressiveness)affectstheeconomy.AsshowninFigure9–4,theshort-runaggregatesupplycurveshiftsup,andtheeconomymovesfrompointAtopointB.PLRASFigure9–4BP2SRAS2Pricelevelkhdaw.comP1SRASA1ADYYY2Income,outputOutputfallsbelowthenaturalrateandpricesrise.TheFedhastwooptions.Itsfirstoptionistoholdaggregatedemandconstant,inwhichcaseoutputfallsbelowitsnatur-alrate.Eventuallypricesfallandrestorefullemployment,butthecostisapainful课后答案网PLRASwww.hackshp.cnFigure9–5CP2SRASPricelevel2PSRAS1A1AD2AD1YYIncome,outputkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter9IntroductiontoEconomicFluctuations77recession.Itssecondoptionistoincreaseaggregatedemandbyincreasingthemoneysupply,bringingtheeconomybacktowardthenaturalrateofoutput,asinFigure9–5.Thispolicyleadstoapermanentlyhigherpricelevelatthenewequilibrium,pointC.Thus,inthecaseofasupplyshock,thereisnowaytoadjustaggregatedemandtomaintainbothfullemploymentandastablepricelevel.ProblemsandApplications1.a.Interest-bearingcheckingaccountsmakeholdingmoneymoreattractive.Thisincreasesthedemandformoney.b.Theincreaseinmoneydemandisequivalenttoadecreaseinthevelocityofmoney.RecallthequantityequationM/P=kY,wherek=1/V.Forthisequationtohold,anincreaseinrealmoneybalancesforakhdaw.comgivenamountofoutputmeansthatkmustincrease;thatis,velocityfalls.Becauseinterestoncheckingaccountsencouragespeopletoholdmoney,dollarscirculatelessfrequently.c.IftheFedkeepsthemoneysupplythesame,thedecreaseinvelocityshiftstheaggregatedemandcurvedownward,asinFigure9–6.Intheshortrunwhenpricesaresticky,theeconomymovesfromtheinitialequilibrium,pointA,totheshort-runequilibrium,pointB.Thedropinaggregatedemandreducestheoutputoftheeconomybelowthenaturalrate.Figure9–6PLRAS课后答案网BAP1www.hackshp.cnSRASPricelevelPC2AD1AD2YYY2Income,outputOvertime,thelowlevelofaggregatedemandcausespricesandwagestofall.Aspricesfall,outputgraduallyrisesuntilitreachesthenatural-ratelevelofout-putatpointC.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 78AnswerstoTextbookQuestionsandProblemsd.Thedecreaseinvelocitycausestheaggregatedemandcurvetoshiftdownward.TheFedcouldincreasethemoneysupplytooffsetthisdecreaseandtherebyreturntheeconomytoitsoriginalequilibriumatpointA,asinFigure9–7.PLRASFigure9–7ASRASPricelevelAD1ADkhdaw.com2YYIncome,outputTotheextentthattheFedcanaccuratelymeasurechangesinvelocity,ithastheabilitytoreduceoreveneliminatetheimpactofsuchademandshockonoutput.Inparticular,whenaregulatorychangecausesmoneydemandtochangeinapre-dictableway,theFedshouldmakethemoneysupplyrespondtothatchangeinordertopreventitfromdisruptingtheeconomy.2.a.IftheFedreducesthemoneysupply,thentheaggregatedemandcurveshiftsdown,asinFigure9–8.ThisresultisbasedonthequantityequationMV=PY,whichtellsusthatadecreaseinmoneyMleadstoaproportionatedecreaseinnominaloutputPY(assumingthatvelocityVisfixed).ForanygivenpricelevelP,thelevelofoutput课后答案网Yislower,andforanygivenY,Pislower.Pwww.hackshp.cnLRASFigure9–8PSRASPricelevelAD1AD2YYIncome,outputkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter9IntroductiontoEconomicFluctuations79b.RecallfromChapter4thatwecanexpressthequantityequationintermsofper-centagechanges:%∆inM+%∆inV=%∆inP+%∆inY.Ifweassumethatvelocityisconstant,thenthe%∆inV=0.Therefore,%∆inM=%∆inP+%∆inY.Weknowthatintheshortrun,thepricelevelisfixed.Thisimpliesthatthe%∆inP=0.Therefore,%∆inM=%∆inY.Basedonthisequation,weconcludethatintheshortruna5-percentreductioninthemoneysupplyleadstoa5-percentreductioninoutput.ThisisshowninFigure9–9.LRASkhdaw.comPPFigure9–9BAP1SRASPricelevel5%ADC1P2AD2YYYY课后答案网25%Income,outputwww.hackshp.cnInthelongrunweknowthatpricesareflexibleandtheeconomyreturnstoitsnaturalrateofoutput.Thisimpliesthatinthelongrun,the%∆inY=0.Therefore,%∆inM=%∆inP.Basedonthisequation,weconcludethatinthelongruna5-percentreductioninthemoneysupplyleadstoa5-percentreductioninthepricelevel,asshowninFigure9–9.c.Okun’slawreferstothenegativerelationshipthatexistsbetweenunemploymentandrealGDP.Okun’slawcanbesummarizedbytheequation:%∆inRealGDP=3%–2×[∆inUnemploymentRate].Thatis,outputmovesintheoppositedirectionfromunemployment,witharatioof2to1.Intheshortrun,whenYfalls5percent,unemploymentincreases2-1/2percent.Inthelongrun,bothoutputandunemploymentreturntotheirnaturalratelevels.Thus,thereisnolong-runchangeinunemployment.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 80AnswerstoTextbookQuestionsandProblemsd.ThenationalincomeaccountsidentitytellsusthatsavingS=Y–C–G.Thus,whenYfalls,Sfalls.Figure9–10showsthatthiscausestherealinterestratetorise.WhenYreturnstoitsoriginalequilibriumlevel,sodoestherealinterestrate.rSSFigure9–1021r2Realinterestraterkhdaw.com1I(r)I,SInvestment,Saving3.a.Anexogenousdecreaseinthevelocityofmoneycausestheaggregatedemandcurvetoshiftdownward,asinFigure9–11.Intheshortrun,pricesarefixed,sooutputfalls.PLRASFigure9–11课后答案网www.hackshp.cnBAPSRAS1PricelevelCP2AD1AD2YYIncome,outputIftheFedwantstokeepoutputandemploymentattheirnatural-ratelevels,itmustincreaseaggregatedemandtooffsetthedecreaseinvelocity.Byincreasingthemoneysupply,theFedcanshifttheaggregatedemandcurveupward,restor-khdaw.comingtheeconomytoitsoriginalequilibriumatpointA.Boththepricelevelandoutputremainconstant.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter9IntroductiontoEconomicFluctuations81IftheFedwantstokeeppricesstable,thenitwantstoavoidthelong-runadjustmenttoalowerpricelevelatpointCinFigure9–11.Therefore,itshouldincreasethemoneysupplyandshifttheaggregatedemandcurveupward,againrestoringtheoriginalequilibriumatpointA.Thus,bothFedsmakethesamechoiceofpolicyinresponsetothisdemandshock.b.Anexogenousincreaseinthepriceofoilisanadversesupplyshockthatcausestheshort-runaggregatesupplycurvetoshiftupward,asinFigure9–12.PLRASFigure9–12CPSRAS22khdaw.comBPSRASPricelevel11AAD2AD1YYIncome,outputIftheFedcaresaboutkeepingoutputandemploymentattheirnatural-ratelevels,thenitshouldincreaseaggregatedemandbyincreasingthemoneysupply.Thispolicyresponseshiftstheaggregatedemandcurveupwards,asshownintheshiftfromAD1toAD2inFigure9–12.Inthiscase,theeconomyimmediatelyreachesanewequilibriumatpointC.ThepricelevelatpointCispermanentlyhigher,butthereisnolossinoutputassociatedwiththeadversesupplyshock.课后答案网IftheFedcaresaboutkeepingpricesstable,thenthereisnopolicyresponseitcanimplement.Intheshortrun,thepricelevelstaysatthehigherlevelP2.IftheFedincreasesaggregatedemand,thentheeconomyendsupwithapermanentlywww.hackshp.cnhigherpricelevel.Hence,theFedmustsimplywait,holdingaggregatedemandconstant.Eventually,pricesfalltorestorefullemploymentattheoldpricelevelP1.Butthecostofthisprocessisaprolongedrecession.Thus,thetwoFedsmakeadifferentpolicychoiceinresponsetoasupplyshock.4.FromthemainNBERwebpage(www.nber.org),IfollowedthelinktoBusinessCycleDates(http://www.nber.org/cycles.html,downloadedFebruary10,2002).Asofthiswriting,thelatestturningpointwasinMarch2001,whentheeconomyswitchedfromexpansiontocontraction.Previousrecessions(contractions)overthepastthreedecadeswereJuly1990toMarch1991;July1981toNovember1982;January1980toJuly1980;andNovember1973toMarch1975.(NotethatintheNBERtable,thebeginningdateofarecessionisshownasthe“peak”(secondcolumnshown)ofoneexpansion,andtheendoftherecessionisshownasthe“trough”(firstcolumnshown)ofthenextexpansion.)khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER10AggregateDemandIQuestionsforReview1.TheKeynesiancrosstellsusthatfiscalpolicyhasamultipliedeffectonincome.Thereasonisthataccordingtotheconsumptionfunction,higherincomecauseshighercon-sumption.Forexample,anincreaseingovernmentpurchasesof∆Graisesexpenditureand,therefore,incomeby∆G.ThisincreaseinincomecausesconsumptiontorisebyMPC×∆G,whereMPCisthemarginalpropensitytoconsume.Thisincreaseincon-sumptionraisesexpenditureandincomeevenfurther.Thisfeedbackfromconsumptiontoincomecontinuesindefinitely.Therefore,intheKeynesian-crossmodel,increasinggovernmentspendingbyonedollarcausesanincreaseinincomethatisgreaterthanonedollar:itincreasesby∆G/(1–MPC).2.Thetheoryofliquiditypreferenceexplainshowthesupplyanddemandforrealmoneykhdaw.combalancesdeterminetheinterestrate.Asimpleversionofthistheoryassumesthatthereisafixedsupplyofmoney,whichtheFedchooses.ThepricelevelPisalsofixedinthismodel,sothatthesupplyofrealbalancesisfixed.Thedemandforrealmoneybalancesdependsontheinterestrate,whichistheopportunitycostofholdingmoney.Atahighinterestrate,peopleholdlessmoneybecausetheopportunitycostishigh.Byholdingmoney,theyforgotheinterestoninterest-bearingdeposits.Incontrast,atalowinterestrate,peopleholdmoremoneybecausetheopportunitycostislow.Figure10–1graphsthesupplyanddemandforrealmoneybalances.Basedonthistheoryofliquiditypreference,theinterestrateadjuststoequilibratethesupplyanddemandforrealmoneybalances.rSupplyofrealFigure10–1moneybalances课后答案网rwww.hackshp.cnInterestrateDemandforL(r)=realmoneybalancesM/PM/PRealmoneybalanceskhdaw.com82若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter10AggregateDemandI83Whydoesanincreaseinthemoneysupplylowertheinterestrate?ConsiderwhathappenswhentheFedincreasesthemoneysupplyfromM1toM2.BecausethepricelevelPisfixed,thisincreaseinthemoneysupplyshiftsthesupplyofrealmoneybal-ancesM/Ptotheright,asinFigure10–2.rFigure10–2r1Interestrater2khdaw.comL(r)M/PM/PM/P12RealmoneybalancesTheinterestratemustadjusttoequilibratesupplyanddemand.Attheoldinterestrater1,supplyexceedsdemand.Peopleholdingtheexcesssupplyofmoneytrytocon-vertsomeofitintointerest-bearingbankdepositsorbonds.Banksandbondissuers,whoprefertopaylowerinterestrates,respondtothisexcesssupplyofmoneybylower-ingtheinterestrate.Theinterestratefallsuntilanewequilibriumisreachedatr2.3.TheIScurvesummarizestherelationshipbetweentheinterestrateandthelevelofincomethatarisesfromequilibriuminthemarketforgoodsandservices.Investmentisnegativelyrelatedtotheinterestrate.AsillustratedinFigure10–3,iftheinterestraterisesfromr1tor2,thelevelofplannedinvestmentfallsfromI1toI2.课后答案网rwww.hackshp.cnFigure10–3r2r1InterestrateII(r)(r)III21Investmentkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 84AnswerstoTextbookQuestionsandProblemsTheKeynesiancrosstellsusthatareductioninplannedinvestmentshiftstheexpendi-turefunctiondownwardandreducesnationalincome,asinFigure10–4(A).EEY=EFigure10–4E=C(Y–T)+I(r)+G11∆IE=C(Y–T)+I(r)+G22Plannedexpenditure45˚YYY21Income,outputkhdaw.com(A)rr2r1InterestrateISYYY21Income,output课后答案网(B)Thus,asshowninFigure10–4(B),ahigherinterestrateresultsinalowerlevelofwww.hackshp.cnnationalincome:theIScurveslopesdownward.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter10AggregateDemandI854.TheLMcurvesummarizestherelationshipbetweenthelevelofincomeandtheinter-estratethatarisesfromequilibriuminthemarketforrealmoneybalances.Ittellsustheinterestratethatequilibratesthemoneymarketforanygivenlevelofincome.ThetheoryofliquiditypreferenceexplainswhytheLMcurveslopesupward.ThistheoryassumesthatthedemandforrealmoneybalancesL(r,Y)dependsnegativelyontheinterestrate(becausetheinterestrateistheopportunitycostofholdingmoney)andpositivelyonthelevelofincome.Thepricelevelisfixedintheshortrun,sotheFeddeterminesthefixedsupplyofrealmoneybalancesM/P.AsillustratedinFigure10–5(A),theinterestrateequilibratesthesupplyanddemandforrealmoneybalancesforagivenlevelofincome.Figure10–5rMP/rLMkhdaw.comr2r2L(r,Y)2InterestrateInterestraterr11L(r,Y)1MP/YYY12RealmoneybalancesIncome,output(A)(B)Nowconsiderwhathappenstotheinterestratewhenthelevelofincomeincreas-esfromY1toY2.Theincreaseinincomeshiftsthemoneydemandcurveupward.Attheoldinterestrater1,thedemandforrealmoneybalancesnowexceedsthesupply.Theinterestratemustrisetoequilibratesupplyanddemand.Therefore,asshownin课后答案网Figure10–5(B),ahigherlevelofincomeleadstoahigherinterestrate:TheLMcurveslopesupward.www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 86AnswerstoTextbookQuestionsandProblemsProblemsandApplications1.a.TheKeynesiancrossgraphsaneconomy’splannedexpenditurefunction,E=C(Y–T)+I+G,andtheequilibriumconditionthatactualexpenditureequalsplannedexpenditure,Y=E,asshowninFigure10–6.Y=EFigure10–6EE=C(Y–T)+I+G22BE1=C(Y–T)+I+G1∆GAkhdaw.comPlannedexpediturePlannedexpenditure45˚YYY12Income,outputAnincreaseingovernmentpurchasesfromG1toG2shiftstheplannedexpendi-turefunctionupward.ThenewequilibriumisatpointB.ThechangeinYequalstheproductofthegovernment-purchasesmultiplierandthechangeingovern-mentspending:∆Y=[1/(1–MPC)]∆G.BecauseweknowthatthemarginalpropensitytoconsumeMPCislessthanone,thisexpressiontellsusthataone-dollarincreaseinGleadstoanincreaseinYthatisgreaterthanonedollar.b.Anincreaseintaxes∆TreducesdisposableincomeY–Tby∆Tand,therefore,reducesconsumptionby课后答案网MPC×∆T.ForanygivenlevelofincomeY,plannedexpenditurefalls.IntheKeynesiancross,thetaxincreaseshiftstheplanned-expenditurefunctiondownbywww.hackshp.cnMPC×∆T,asinFigure10–7.EFigure10–7Y=EMPCT×∆E=C(Y–T)+I+GAPlannedexpenditureB45˚YYY21–MPC∆T1–MPCkhdaw.comIncome,outputIncome,output若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter10AggregateDemandI87TheamountbywhichYfallsisgivenbytheproductofthetaxmultiplierandtheincreaseintaxes:∆Y=[–MPC/(1–MPC)]∆T.c.Wecancalculatetheeffectofanequalincreaseingovernmentexpenditureandtaxesbyaddingthetwomultipliereffectsthatweusedinparts(a)and(b):∆Y=[(1/(1–MPC))∆G]–[(MPC/(1–MPC))∆T].GovernmentTaxSpendingMultiplierMultiplierBecausegovernmentpurchasesandtaxesincreasebythesameamount,weknowthat∆G=∆T.Therefore,wecanrewritetheaboveequationas:∆Y=[(1/(1–MPC))–(MPC/(1–MPC))]∆G=∆G.Thisexpressiontellsusthatanequalincreaseingovernmentpurchasesandtaxeskhdaw.comincreasesYbytheamountthatGincreases.Thatis,thebalanced-budgetmulti-plierisexactly1.2.a.TotalplannedexpenditureisE=C(Y–T)+I+G.PluggingintheconsumptionfunctionandthevaluesforinvestmentI,govern-mentpurchasesG,andtaxesTgiveninthequestion,totalplannedexpenditureEisE=200+0.75(Y–100)+100+100=0.75Y+325.ThisequationisgraphedinFigure10–8.Y=EFigure10–8E课后答案网www.hackshp.cnE=0.75Y+325Plannedexpenditure32545Y*=1,300YIncome,outputb.Tofindtheequilibriumlevelofincome,combinetheplanned-expenditureequa-tionderivedinpart(a)withtheequilibriumconditionY=E:Y=0.75Y+325Y=1,300.Theequilibriumlevelofincomeis1,300,asindicatedinFigure10–8.khdaw.comc.Ifgovernmentpurchasesincreaseto125,thenplannedexpenditurechangestoE=0.75Y+350.EquilibriumincomeincreasestoY=1,400.Therefore,an若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 88AnswerstoTextbookQuestionsandProblemsincreaseingovernmentpurchasesof25(i.e.,125–100=25)increasesincomeby100.Thisiswhatweexpecttofind,becausethegovernment-purchasesmultiplieris1/(1–MPC):becausetheMPCis0.75,thegovernment-purchasesmultiplieris4.d.Alevelofincomeof1,600representsanincreaseof300overtheoriginallevelofincome.Thegovernment-purchasesmultiplieris1/(1–MPC):theMPCinthisexampleequals0.75,sothegovernment-purchasesmultiplieris4.Thismeansthatgovernmentpurchasesmustincreaseby75(toalevelof175)forincometoincreaseby300.3.a.Whentaxesdonotdependonincome,aone-dollarincreaseinincomemeansthatdisposableincomeincreasesbyonedollar.ConsumptionincreasesbythemarginalpropensitytoconsumeMPC.Whentaxesdodependonincome,aone-dollarincreaseinincomemeansthatdisposableincomeincreasesbyonly(1–t)dollars.ConsumptionincreasesbytheproductoftheMPCandthechangeindisposableincome,or(1–t)MPC.ThisislessthantheMPC.Thekeypointisthatdisposableincomechangesbylessthantotalincome,sotheeffectonconsumptionissmaller.b.Whentaxesarefixed,weknowthat∆Y/∆G=1/(1–MPC).Wefoundthisbycon-khdaw.comsideringanincreaseingovernmentpurchasesof∆G;theinitialeffectofthischangeistoincreaseincomeby∆G.Thisinturnincreasesconsumptionbyanamountequaltothemarginalpropensitytoconsumetimesthechangeinincome,MPC×∆G.Thisincreaseinconsumptionraisesexpenditureandincomeevenfur-ther.Theprocesscontinuesindefinitely,andwederivethemultiplierabove.Whentaxesdependonincome,weknowthattheincreaseof∆Gincreasestotalincomeby∆G;disposableincome,however,increasesbyonly(1–t)∆G—lessthandollarfordollar.Consumptionthenincreasesbyanamount(1–t)MPC×∆G.Expenditureandincomeincreasebythisamount,whichinturncaus-esconsumptiontoincreaseevenmore.Theprocesscontinues,andthetotalchangeinoutputis23∆Y=∆G{1+(1–t)MPC+[(1–t)MPC]+[(1–t)MPC]+....}=∆G[1/(1–(1–t)MPC)].Thus,thegovernment-purchasesmultiplierbecomes1/(1–(1–t)MPC)ratherthan1/(1–课后答案网MPC).Thismeansamuchsmallermultiplier.Forexample,ifthemar-ginalpropensitytoconsumeMPCis3/4andthetaxratetis1/3,thenthemultipli-erfallsfrom1/(1–3/4),or4,to1/(1–(1–1/3)(3/4)),or2.c.Inthischapter,wederivedthewww.hackshp.cnIScurvealgebraicallyandusedittogaininsightintotherelationshipbetweentheinterestrateandoutput.TodeterminehowthistaxsystemalterstheslopeoftheIScurve,wecanderivetheIScurveforthecaseinwhichtaxesdependonincome.Beginwiththenationalincomeaccountsidenti-ty:Y=C+I+G.TheconsumptionfunctionisC=a+b(Y–T–tY).Notethatinthisconsumptionfunctiontaxesareafunctionofincome.Theinvest-mentfunctionisthesameasinthechapter:I=c–dr.Substitutetheconsumptionandinvestmentfunctionsintothenationalincomeaccountsidentitytoobtain:Y=[a+b(Y–T–tY)]+c–dr+G.SolvingforY:a+c1–b–dY=+G+khdaw.comT+r.1–b(1–t)1–b(1–t)1–b(1–t)1–b(1–t)若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter10AggregateDemandI89ThisISequationisanalogoustotheonederivedinthetextexceptthateachtermisdividedby1–b(1–t)ratherthanby(1–b).Weknowthattisataxrate,whichislessthan1.Therefore,weconcludethatthisIScurveissteeperthantheoneinwhichtaxesareafixedamount.4.a.Ifsocietybecomesmorethrifty—meaningthatforanygivenlevelofincomepeoplesavemoreandconsumeless—thentheplanned-expenditurefunctionshiftsdown-ward,asinFigure10–9(notethatC2P,outputrises.Butitisonlytheunanticipatedpartofmoneygrowththatincreasesoutput.b.TheFedoftentriestostabilizetheeconomybyoffsettingshockstooutputandunemployment.Forexample,itmightincreasethemoneysupplyduringre-cessionsinanattempttostimulatetheeconomy,anditmightreducethemoneysupplyduringboomsinanattempttoslowitdown.TheFedcanonlydothisbysurprisingpeopleaboutthepricelevel:duringarecession,theywantpricestobehigherthanexpected,andduringbooms,theywantpricestobelowerthanexpect-ed.Ifpeoplehaverationalexpectations,however,theywillexpecttheFedtorespondthisway.Soiftheeconomyisinaboom,peopleexpecttheFedtoreducethemoneysupply;inarecession,peopleexpecttheFedtoincreasethemoneyesupply.Ineithercase,itisimpossiblefortheFedtocause(khdaw.comP–P)tovarysystem-aticallyfromzero.Sincepeopletakeintoaccountthesystematic,anticipated若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter13AggregateSupply141movementsinmoney,theeffectonoutputofsystematic,activepolicyisexactlythesameasapolicyofkeepingthemoneysupplyconstant.c.IftheFedsetsthemoneysupplyafterpeoplesetwagesandprices,thentheFedcanusemonetarypolicysystematicallytostabilizeoutput.Theassumptionofrationalexpectationsmeansthatpeopleusealloftheinformationavailabletotheminformingexpectationsaboutthepricelevel.ThisincludesinformationaboutthestateoftheeconomyandinformationabouthowtheFedwillrespondtothisstate.Thisdoesnotmeanthatpeopleknowwhatthestateoftheeconomywillbe,nordotheyknowexactlyhowtheFedwillact:theysimplymaketheirbestguess.Astimepasses,theFedlearnsinformationabouttheeconomythatwasunknowntothosesettingwagesandprices.Atthispoint,sincecontractshaveealreadysetthesewagesandprices,peoplearestuckwiththeirexpectationsP.TheFedcanthenusemonetarypolicytoaffecttheactualpricelevelP,andhencecanaffectoutputsystematically.6.Inthismodel,thenaturalrateofunemploymentisanaverageoftheunemploymentkhdaw.comratesinthepasttwoyears.Hence,ifarecessionraisestheunemploymentrateinsomeyear,thenthenaturalrateofunemploymentrisesaswell.Thismeansthatthemodelexhibitshysteresis:short-termcyclicalunemploymentaffectsthelong-termnaturalrateofunemployment.a.Thenaturalrateofunemploymentmightdependonrecentunemploymentforatleasttworeasons,suggestedbytheoriesofhysteresis.First,recentunemploymentratesmightaffecttheleveloffrictionalunemployment.Unemployedworkerslosejobskillsandfindithardertogetjobs;also,unemployedworkersmightlosesomeoftheirdesiretowork,andhencesearchlesshardforajob.Second,recentunem-ploymentratesmightaffectthelevelofwaitunemployment.Iflabornegotiationsgiveagreatervoiceto“insiders”than“outsiders,”thentheinsidersmightpushforhighwagesattheexpenseofjobs.Thiswillbeespeciallytrueinindustriesinwhichnegotiationstakeplacebetweenfirmsandunions.b.IftheFedseekstoreduceinflationpermanentlyby1percentagepoint,thenthePhillipscurvetellsusthatinthefirstperiodwerequiren课后答案网π1–π0=–1=–0.5(u1–u1),ornwww.hackshp.cn(u1–u1)=2.Thatis,werequireanunemploymentrate2percentagepointsabovetheoriginalnnaturalrateu.Nextperiod,however,thenaturalratewillriseasaresultofthe1ncyclicalunemployment.Thenewnaturalrateuwillbe2nu2=0.5[u1+u0]=0.5[(un+2)+un]11n=u+1.1Hence,thenaturalrateofunemploymentrisesby1percentagepoint.IftheFedwantstokeepinflationatitsnewlevel,thenunemploymentinperiod2mustnequalthenewnaturalrateu.Hence,2nu2=u1+1.Ineverysubsequentperiod,itremainstruethattheunemploymentratemustequalthenaturalrate.Thisnaturalrateneverreturnstoitsoriginallevel:wecanshowthisbyderivingthesequenceofunemploymentrates:nu3=(1/2)u2+(1/2)u1=u1+1-1/2nu4=(1/2)u3+(1/2)u2=u1+1-1/4khdaw.comnu5=(1/2)u4+(1/2)u3=u1+1-3/8.若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 142AnswerstoTextbookQuestionsandProblemsUnemploymentalwaysremainsaboveitsoriginalnaturalrate.Infact,wecanshowthatitisalwaysatleast1percentaboveitsoriginalnaturalrate.Thus,toreduceinflationby1percentagepoint,unemploymentrisesaboveitsoriginallevelby2percentagepointsinthefirstyear,andby1ormorepercentagepointsineveryyearafterthat.c.Becauseunemploymentisalwayshigherthanitstarted,outputisalwayslowerthanitwouldhavebeen.Hence,thesacrificeratioisinfinite.d.Withouthysteresis,wefoundthattherewasashort-runtradeoffbutnolong-runtradeoffbetweeninflationandunemployment.Withhysteresis,wefindthatthereisalong-runtradeoffbetweeninflationandunemployment:toreduceinflation,unemploymentmustrisepermanently.7.a.Thenaturalrateofoutputisdeterminedbytheproductionfunction,Y=F(K,L).Ifataxcutraisesworkeffort,itincreasesLand,thus,increasesthenaturalrateofoutput.b.Thetaxcutshiftstheaggregatedemandcurveoutwardforthenormalreasonthatdisposableincomeand,hence,consumptionrise.Itshiftsthelong-runaggregatekhdaw.comsupplycurveoutwardbecausethenaturalrateofoutputrises.Theeffectofthetaxcutontheshort-runaggregatesupply(SRAS)curvedependsonwhichmodelyouuse.Thelaborsupplycurveshiftsoutwardbecauseworkersarewillingtosupplymorelaboratanygivenrealwagewhilethelabordemandcurveisunchanged.Inthesticky-wageorsticky-pricemodelsthequanti-tyoflaborisdemand-determined,sotheSRAScurvedoesnotmove.Bycontrast,theimperfect-informationmodelassumesthatthelabormarketisalwaysinequi-librium,sothegreatersupplyoflaborleadstohigheremploymentimmediately:theSRASshiftsout.c.Ifyouareusingthesticky-wageorsticky-pricemodel,theshort-runanalysisisthesameastheconventionalmodelwithoutthelabor-supplyeffect.Thatis,outputandpricesbothrisebecauseaggregatedemandriseswhileshort-runaggregatesupplyisunchanged.Ifyouusetheimperfect-informationmodel,short-runaggregatesupplyshiftsoutward,sothatthetaxcutismoreexpansionaryandlessinflationarythantheconventionalmodel.Figure13–2showstheeffectsinbothmodels.PointAistheoriginalequilibrium,pointSWisthenewequilibriuminthesticky-wagemodel,andpointIIisthenewequilibriumintheimperfect-informationmodel.课后答案网Pwww.hackshp.cnLRAS1LRAS2Figure13–2SRAS1,SRASSW,SRASSPSWSRASImp.InfoAIIAD2AD1Ykhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter13AggregateSupply143d.Incontrasttothenormalmodel,thetaxcutraiseslong-runoutputbyincreasingthesupplyoflabor.Thepolicy’slong-runeffectonpriceisindeterminate,depend-ing,inpartonwhetherSRASdoes,infact,shiftout.Thechangeinthelong-runequilibriumisshowninFigure13–3.Figure13–3PLRAS1LRAS2SRAS1SRAS2AP1P2Bkhdaw.comAD2AD1Y1Y2Y8.Inthisquote,AlanBlinderarguesthatinlow-inflationcountriesliketheUnitedStates,thebenefitsofdisinflationaresmallwhereasthecostsarelarge.Thatis,menucosts,shoeleathercosts,andtaxdistortionssimplydonotadduptomuch,soeliminat-inginflationoffersonlysmallbenefits.Bycontrast,thecostsintermsofunemploymentandlostoutputthatareassociatedwithloweringinflationareeasilyquantifiableandverylarge.Thebasicpolicyimplicationofthesebeliefsabouttherelativebenefitsandcostsofdisinflationisthatpolicymakersshouldnottightenpolicyinordertolowerinflationratesthatarealreadyrelativelylow.Thestatementleavestwootherissuesambiguous.First,shouldpolicymakersconcernthemselveswithrisinginflation?Second,should课后答案网policymakersconcernthemselveswithmakinginflationmorepredictablearoundthelevelithasinherited?Blindermayfeelthattheseissuesshouldhavelittleweightrela-tivetooutputstabilization.www.hackshp.cn9.FromtheBLSwebsite(www.bls.gov),therearevariouswaystogettheCPIdata.TheapproachItook(inFebruary2002)wastofollowthelinkstotheConsumerPriceIndex,thenIfollowedthelinkstothemostrecent(current)economicnewsrelease.Thisledmetoatableofcontents,andIfollowedthefirstlinktoConsumerPriceIndexSummary(thedirectwebaddressforthatlinkwashttp://www.bls.gov/news.release/cpi.nr0.htm).Midwaythroughthatreleasewasatableshowingthe“per-centagechange[forthe]12monthsendinginDecember”forrecentyears.Fortheyears1996–2001,thetableshows:Year199619971998199920002001OverallCPI3.31.71.62.73.41.6CPIexcludingfoodandenergy2.62.22.41.92.62.7TheoverallCPIwasclearlymorevolatilethantheCPIexcludingfoodandenergy.Forexample,theoverallCPIrosesharplyfrom1998to1999,andfellsharplyfrom2000to2001(patternsthatwerenotevidentintheCPIexcludingfoodandenergy).Thediffer-encereflectsshockstothepriceoffoodandenergy-especiallyenergyprices,whicharehighlyvariable.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 144AnswerstoTextbookQuestionsandProblemsWhenenergyprices,say,godown,thetotalCPIwillriselessthantheCPIexclud-ingfoodandenergy.Thisrepresentsasupplyshock,whichshiftstheaggregatesupplycurveandPhillipscurvedownward.In1997and1998,forexample,whentheoverallCPIroselessthantheCPIexcludingfoodandenergy,wewouldexpectthatthedeclineininflationdidnotnecessarilyrequireunemploymenttoriseaboveitsnaturalrate.Indeed,unemploymentwasfallingoverthatperiod.MoreProblemsandApplicationstoChapter131.a.Theclassicallargeopeneconomymodel(fromtheAppendixtoChapter5)issimilartospecialcase2inthetext,exceptthatitallowstheinterestratetodeviatefromtheworldinterestrate.Thatis,thisisthespecialcasewhereeP=P,L(i,Y)=(1/V)Y,andCF=CF(r-r*),withanon-infinitelyelasticinterna-tionalcapitalflow.Becausecapitalflowsdonotrespondoverwhelminglytoanydifferencesbetweenthedomesticandworldinterestrates,theserateskhdaw.comcan,infact,varyinthiscase.b.TheKeynesiancrossmodelofChapter10isthespecialcasewhere(i)theeconomyisclosed,sothatCF(r-r*)=0;(ii)I(r)=I,sothatinvestmentisgivenexogenously;and(iii)αisinfinite,sothattheshort-runaggregate-supplycurveishorizontal.Inthisspecialcase,outputdependssolelyonthedemandforgoodsandservices.c.TheIS-LMmodelforthelargeopeneconomy(fromtheappendixtoChapter12)isthespecialcasewhereαisinfiniteandCF=CF(r-r*)isnotinfinitelyelastic.Inthiscase,theshort-runaggregatesupplycurveishorizontal,andcapitalflowsdonotrespondtoomuchtodifferencesbetweenthedomesticandworldinterestrates.课后答案网www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER14StabilizationPolicyQuestionsforReview1.Theinsidelagisthetimeittakesforpolicymakerstorecognizethatashockhashittheeconomyandtoputtheappropriatepoliciesintoeffect.Onceapolicyisinplace,theoutsidelagistheamountoftimeittakesforthepolicyactiontoinfluencetheeconomy.Thislagarisesbecauseittakestimeforspending,income,andemploymenttorespondtothechangeinpolicy.Fiscalpolicyhasalonginsidelag—forexample,itcantakeyearsfromthetimeataxchangeisproposeduntilitbecomeslaw.Monetarypolicyhasarelativelyshortinsidelag.OncetheFeddecidesapolicychangeisneeded,itcanmakethechangeindaysorweeks.Monetarypolicy,however,hasalongoutsidelag.Anincreaseinthemoneysupplykhdaw.comaffectstheeconomybyloweringinterestrates,which,inturn,increasesinvestment.Butmanyfirmsmakeinvestmentplansfarinadvance.Thus,fromthetimetheFedacts,ittakesaboutsixmonthsbeforetheeffectsshowupinrealGDP.2.Bothmonetaryandfiscalpolicyworkwithlonglags.Asaresult,indecidingwhetherpolicyshouldexpandorcontractaggregatedemand,wemustpredictwhatthestateoftheeconomywillbesixmonthstoayearinthefuture.Onewayeconomiststrytoforecastdevelopmentsintheeconomyiswiththeindexofleadingindicators.Itcomprises11dataseriesthatoftenfluctuateinadvanceoftheeconomy,suchasstockprices,thenumberofbuildingpermitsissued,thevalueofordersfornewplantsandequipment,andthemoneysupply.Asecondwayforecasterslookaheadiswithmodelsoftheeconomy.Theselarge-scalecomputermodelshavemanyequations,eachrepresentingapartoftheeconomy.Oncewemakeassumptionsaboutthepathoftheexogenousvariables—taxes,govern-mentspending,themoneysupply,thepriceofoil,andsoforth—themodelsyieldpre-dictionsaboutthepathsofunemployment,inflation,output,andotherendogenousvariables.课后答案网3.Thewaypeoplerespondtoeconomicpoliciesdependsontheirexpectationsaboutthefuture.Theseexpectationsdependonmanythings,includingtheeconomicpoliciesthatthegovernmentpursues.TheLucascritiqueofeconomicpolicyarguesthattraditionalwww.hackshp.cnmethodsofpolicyevaluationdonotadequatelytakeaccountofthewaypolicyaffectsexpectations.Forexample,thesacrificeratio—thenumberofpercentagepointsofGDPthatmustbeforgonetoreduceinflationby1percentagepoint—dependsonindividuals’expectationsofinflation.Wecannotsimplyassumethattheseexpectationswillremainconstant,orwilladjustonlyslowly,nomatterwhatpoliciesthegovernmentpursues;instead,theseexpectationswilldependonwhattheFeddoes.4.Aperson’sviewofmacroeconomichistoryaffectshisorherviewofwhethermacroeco-nomicpolicyshouldplayanactiveroleorapassiverole.Ifonebelievesthattheecono-myhasexperiencedmanylargeshockstoaggregatesupplyandaggregatedemand,andifpolicyhassuccessfullyinsulatedtheeconomyfromtheseshocks,thenthecaseforactivepolicyisclear.Conversely,ifonebelievesthattheeconomyhasexperiencedfewlargeshocks,andifthefluctuationsweobservecanbetracedtoinepteconomicpolicy,thenthecaseforpassivepolicyisclear.khdaw.com145若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 146AnswerstoTextbookQuestionsandProblems5.Theproblemoftimeinconsistencyarisesbecauseexpectationsoffuturepoliciesaffecthowpeopleacttoday.Asaresult,policymakersmaywanttoannouncetodaythepolicytheyintendtofollowinthefuture,inordertoinfluencetheexpectationsheldbypri-vatedecisionmakers.Oncetheseprivatedecisionmakershaveactedontheirexpecta-tions,thepolicymakersmaybetemptedtorenegeontheirannouncement.Forexample,yourprofessorhasanincentivetoannouncethattherewillbeafinalexaminyourcourse,sothatyoustudyandlearnthematerial.Onthemorningoftheexam,whenyouhavealreadystudiedandlearnedallthematerial,theprofessormightbetemptedtocanceltheexamsothatheorshedoesnothavetogradeit.Similarly,thegovernmenthasanincentivetoannouncethatitwillnotnegotiatewithterrorists.Ifterroristsbelievethattheyhavenothingtogainbykidnappinghostages,thentheywillnotdoso.However,oncehostagesarekidnapped,thegovern-mentfacesastrongtemptationtonegotiateandmakeconcessions.Inmonetarypolicy,supposetheFedannouncesapolicyoflowinflation,andeveryonebelievestheannouncement.TheFedthenhasanincentivetoraiseinflation,becauseitfacesafavorabletradeoffbetweeninflationandunemployment.khdaw.comTheproblemwithsituationsinwhichtimeinconsistencyarisesisthatpeopleareledtodistrustpolicyannouncements.Thenstudentsdonotstudyfortheirexams,ter-roristskidnaphostages,andtheFedfacesanunfavorabletradeoff.Inthesesituations,arulethatcommitsthepolicymakertoaparticularpolicycansometimeshelpthepoli-cymakerachievehisorhergoals—studentsstudy,terroristsdonottakehostages,andinflationremainslow.6.OnepolicyrulethattheFedmightfollowistoallowthemoneysupplytogrowatacon-stantrate.Monetaristeconomistsbelievethatmostlargefluctuationsintheeconomyresultfromfluctuationsinthemoneysupply;hence,aruleofsteadymoneygrowthwouldpreventtheselargefluctuations.AsecondpolicyruleisanominalGDPtarget.Underthisrule,theFedwouldannounceaplannedpathfornominalGDP.IfnominalGDPwerebelowthistarget,forexample,theFedwouldincreasemoneygrowthtostimulateaggregatedemand.Anadvantageofthispolicyruleisthatitwouldallowmonetarypolicytoadjusttochangesinthevelocityofmoney.Athirdpolicyruleisatargetforthepricelevel.TheFedwouldannounceaplannedpathforthepricelevelandadjustthemoneysupplywhentheactualprice课后答案网leveldeviatedfromitstarget.Thisrulemakessenseifonebelievesthatpricestabilityistheprimarygoalofmonetarypolicy.www.hackshp.cn7.Thereareatleastthreeobjectionstoabalanced-budgetruleforfiscalpolicy,thatis,arulepreventingthegovernmentfromspendingmorethanitreceivesintaxrevenue.First,budgetdeficitsorsurplusescanhelptostabilizetheeconomy.Inareces-sion,forexample,taxesautomaticallyfallandtransfersautomaticallyrise.Thesetendbothtostabilizetheeconomyandtoraisethebudgetintodeficit.Second,budgetdeficitsorsurplusesallowthegovernmenttosmoothtaxratesacrossyears,allowingthegovernmenttoavoidlargeswingsintaxratesfromoneyeartothenext.Tokeeptaxratessmooth,thegovernmentshouldrundeficitswhenincomeisunusuallylow,asinarecession,orwhenexpendituresareunusuallyhigh,asinwartime.Third,budgetdeficitscanbeusedtoshiftataxburdenfromcurrenttofuturegen-erations.Ifthecurrentgenerationfightsawartomaintainfreedom,futuregenerationsbenefit.Byrunningdeficitstopayforthewar,futuregenerationsthenhelppayforthewar.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter14StabilizationPolicy147ProblemsandApplications1.SupposetheeconomyhasaPhillipscurveneu=u–α(π–π).Asusual,thisimpliesthatifinflationislowerthanexpected,thenunemploymentrisesaboveitsnaturalrate,andthereisarecession.Similarly,ifinflationishigherthanexpected,thenunemploymentfallsbelowitsnaturalrate,andthereisaboom.Also,supposethattheDemocraticpartyalwaysfollowsapolicyofhighmoneygrowthandDhighinflation(callitπ),whereastheRepublicanpartyalwaysfollowsapolicyoflowRmoneygrowthandlowinflation(callitπ).a.Thepatternofthepoliticalbusinesscycleweobservedependsontheinflationratepeopleexpectatthebeginningofeachterm.Ifexpectationsareperfectlyrationalandcontractscanbeadjustedimmediatelywhenanewpartycomesintopower,thentherewillbenopoliticalbusinesscyclepatterntounemployment.Forexam-ple,iftheDemocratswinthecoinflip,peopleimmediatelyexpecthighinflation.DeBecauseπ=π=π,theDemocrats’monetarypolicywillhavenoeffectontherealkhdaw.comeconomy.Wedoobserveapoliticalbusinesscyclepatterntoinflation,inwhichDemocratshavehighinflationandRepublicanshavelowinflation.Nowsupposethatcontractsarelongenoughthatnominalwagesandpricescannotbeadjustedimmediately.Beforetheresultofthecoinflipisknown,thereisa50-percentchancethatinflationwillbehighanda50-percentchancethatinflationwillbelow.Thus,atthebeginningofeachterm,ifpeople’sexpectationsarerational,theyexpectaninflationrateofeDRπ=0.5π+0.5π.IfDemocratswinthecointoss,thenπ>πeinitially,andunemploymentfallsbelowitsnaturalrate.Hence,thereisaboomatthebeginningofDemocraticterms.DOvertime,inflationrisestoπ,andunemploymentreturnstoitsnaturalrate.IfRepublicanswin,theninflationislowerthanexpected,andunemploymentrisesaboveitsnaturalrate.Hence,thereisarecessionatthebeginningofRRepublicanterms.Overtime,inflationfallstoπ,andunemploymentreturnstoitsnaturalrate.b.Ifthetwopartiestaketurns,thentherewillbenopoliticalbusinesscycleto课后答案网unemployment,sinceeveryoneknowswhichpartywillbeinoffice,soeveryoneknowswhetherinflationwillbehighorlow.Evenlong-lastingcontractswilltaketheactualinflationrateintoaccount,sinceallfutureinflationratesareknownwww.hackshp.cnwithcertainty.Inflationwillalternatebetweenahighlevelandalowlevel,dependingonwhichpartyisinpower.2.Thereisatime-inconsistencyproblemwithanannouncementthatnewbuildingswillbeexemptfromrent-controllaws.Beforenewhousingisbuilt,acityhasanincentivetopromisethisexemption:landlordsthenexpecttoreceivehighrentsfromthenewhous-ingtheyprovide.Oncethenewhousinghasbeenbuilt,however,acityhasanincentivetorenegeonitspromisenottoextendrentcontrol.Thatway,manytenantsgainwhileafewlandlordslose.Theproblemisthatbuildersmightexpectthecitytorenegeonitspromise;asaresult,theymaynotbuildnewbuildings.3.TheFederalReservewebsite(www.federalreserve.gov)hasmanyitemsthatarerele-vanttoamacroeconomicscourse.Forexample,followingthelinksto“MonetaryPolicy”(http://www.federalreserve.gov/policy.htm)takeyoutomaterialfromtheFederalOpenMarketCommitteemeetingsandtotestimonygivenbytheFederalReserveChairmantwiceayeartoCongress.OtherlinkstakeyoutospeechesortestimonybytheChairmanormembersoftheBoardofGovernorsoftheFederalReserveSystem.Notethatthewebsitealsocontainsmanyitemsthatarenotrelatedtomacroeconomics.(Forexample,ifyoucheckthe“PressRelease”linkonthewebsite,youarelikelytokhdaw.comfindmanyitemsthatconcernregulatorymatters,sincetheFederalReserveplaysanimportantroleinregulatingthebankingsystem.)若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 148AnswerstoTextbookQuestionsandProblemsMoreProblemsandApplicationstoChapter141.a.Inthemodelsofar,nothinghappenstotheinflationratewhenthenaturalrateofunemploymentchanges.b.Thenewlossfunctionis22L(u,π)=u+γπ.ThefirststepistosolvefortheFed’schoiceofinflation,foranygiveninflationaryexpectations.SubstitutingthePhillipscurveintothelossfunction,wefind:ne22L(u,π)=[u–α(π–π)]+γπ.Wenowdifferentiatewithrespecttoinflationπ,andsetthisfirst-orderconditionequaltozero:2endL/dπ=2α(π–π)–2αu+2γπ=0or,2en2π=(απ+αu)/(α+γ).khdaw.comOfcourse,rationalagentsunderstandthattheFedwillchoosethislevelofinfla-tion.Expectedinflationequalsactualinflation,sotheaboveequationsimplifiesto:nπ=αu/γ.c.Whenthenaturalrateofunemploymentrises,theinflationratealsorises.Why?TheFed’sdislikeforamarginalincreaseinunemploymentnowrisesasunem-ploymentrises.Hence,privateagentsknowthattheFedhasagreaterincentivetoinflatewhenthenaturalrateishigher.Hence,theequilibriuminflationratealsorises.d.Appointingaconservativecentralbankermeansthatγrises.Hence,theequilibri-uminflationratefalls.Whathappenstounemploymentdependsonhowquicklyinflationaryexpectationsadjust.Iftheyadjustimmediately,thenthereisnochangeinunemployment,whichremainsatthenaturalrate.Ifexpectationsadjustslowly,however,then,fromthePhillipscurve,thefallininflationcausesunemploymenttoriseabovethenaturalrate.课后答案网www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER15GovernmentDebtQuestionsforReview1.WhatisunusualaboutU.S.fiscalpolicysince1980isthatgovernmentdebtincreasedsharplyduringaperiodofpeaceandprosperity.OverthecourseofU.S.history,theindebtednessofthefederalgovernmentrelativetoGDPhasvariedsubstantially.Historically,thedebt–GDPratiogenerallyincreasessharplyduringmajorwarsandfallsslowlyduringpeacetime.The1980sand1990saretheonlyinstanceinU.S.histo-ryofalargeincreaseinthedebt–GDPratioduringpeacetime.2.Manyeconomistsprojectincreasingbudgetdeficitsandgovernmentdebtoverthenextseveraldecadesbecauseofchangesintheageprofileofthepopulation.Lifeexpectancyhassteadilyincreased,andbirthrateshavefallen.Asaresult,theelderlyarebecom-ingalargershareofthepopulation.Asmorepeoplebecomeeligiblefor“entitlements”khdaw.comofSocialSecurityandMedicare,governmentspendingwillriseautomaticallyovertime.Withoutchangesintaxandexpenditurepolicies,governmentdebtwillalsorisesharply.3.Standardmeasuresofthebudgetdeficitareimperfectmeasuresoffiscalpolicyforatleastfourreasons.First,theydonotcorrectfortheeffectsofinflation.Themeasureddeficitshouldequalthechangeinthegovernment’srealdebt,notthechangeinthenominaldebt.Second,suchmeasuresdonotoffsetchangesingovernmentliabilitieswithchangesingovernmentassets.Tomeasurethegovernment’soverallindebtedness,weshouldsubtractgovernmentassetsfromgovernmentdebt.Hence,thebudgetdeficitshouldbemeasuredasthechangeindebtminusthechangeinassets.Third,standardmeasuresomitsomeliabilitiesaltogether,suchasthepensionsofgovernmentworkersandaccumulatedfutureSocialSecuritybenefits.Fourth,theydonotcorrectfortheeffectsofthebusinesscycle.4.Publicsavingisthedifferencebetweentaxesandgovernmentpurchases,soadebt-financedtaxcutreducespublicsavingbythefullamountthattaxesfall.Thetaxcut课后答案网alsoincreasesdisposableincome.Accordingtothetraditionalview,sincethemarginalpropensitytoconsumeisbetweenzeroandone,bothconsumptionandprivatesavingincrease.Becauseconsumptionrises,privatesavingincreasesbylessthantheamountwww.hackshp.cnofthetaxcut.Nationalsavingisthesumofpublicandprivatesaving;becausepublicsavingfallsbymorethanprivatesavingincreases,nationalsavingfalls.5.AccordingtotheRicardianview,adebt-financedtaxcutdoesnotstimulateconsump-tionbecauseitdoesnotraisepermanentincome—forward-lookingconsumersunder-standthatgovernmentborrowingtodaymeanshighertaxesinthefuture.Becausethetaxcutdoesnotchangeconsumption,householdssavetheextradisposableincometopayforthefuturetaxliabilitythatthetaxcutimplies:privatesavingincreasesbythefullamountofthetaxcut.Thisincreaseinprivatesavingexactlyoffsetsthedecreaseinpublicsavingassociatedwiththetaxcut.Therefore,thetaxcuthasnoeffectonnationalsaving.6.Whichviewofgovernmentdebtyouholddependsonhowyouthinkconsumersbehave.Ifyouholdthetraditionalview,thenyoubelievethatadebt-financedtaxcutstimu-latesconsumerspendingandlowersnationalsaving.Youmightbelievethisforseveralreasons.First,consumersmaybeshortsightedorirrational,sothattheythinktheirpermanentincomehasincreasedeventhoughithasnot.Second,consumersmayfacebindingborrowingconstraints,sothattheyareonlyabletoconsumetheircurrentincome.Third,consumersmayexpectthattheimpliedtaxliabilitywillfallonfuturekhdaw.com149若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 150AnswerstoTextbookQuestionsandProblemsgenerations,andtheseconsumersmaynotcareenoughabouttheirchildrentoleavethemabequesttooffsetthistaxliability.IfyouholdtheRicardianview,thenyoubelievethattheprecedingobjectionsarenotimportant.Inparticular,youbelievethatconsumershavetheforesighttoseethatgovernmentborrowingtodayimpliesfuturetaxestobeleviedonthemortheirdescen-dants.Hence,adebt-financedtaxcutgivesconsumerstransitoryincomethateventual-lywillbetakenback.Asaresult,consumerswillsavetheextraincometheyreceiveinordertooffsetthatfuturetaxliability.7.Thelevelofgovernmentdebtmightaffectthegovernment’sincentivesregardingmoneycreationbecausethegovernmentdebtisspecifiedinnominalterms.Ahigherpricelevelreducestherealvalueofthegovernment’sdebt.Hence,ahighlevelofdebtmightencouragethegovernmenttoprintmoneyinordertoraisethepricelevelandreducetherealvalueofitsdebt.khdaw.comProblemsandApplications1.Thebudgetdeficitisdefinedasgovernmentpurchasesminusgovernmentrevenues.SellingtheLibertyBelltoTacoBellwouldraiserevenuefortheU.S.governmentand,hence,reducethedeficit.Asmallerbudgetdeficitwouldleadthegovernmenttoborrowless,andasaresultthemeasurednationaldebtwouldfall.IftheUnitedStatesadoptedcapitalbudgeting,thenetnationaldebtwouldbedefinedastheassetsofthegovernment(itsschools,armies,parks,andsoforth)minustheliabilitiesofthegovernment(principallyoutstandingpublicdebt).BysellingtheLibertyBellthegovernmentwouldbereducingitsassetsbythevalueoftheLibertyBellandreducingitsliabilitiesbyitspurchaseprice.AssumingTacoBellpaidafairprice,thesereductionswouldbethesameamountandthenetnationaldebtwouldbeunchanged.BeforeyouworrytoomuchabouttheTacoLibertyBell,youmightwanttonoticethatthisadappearedonAprilFoolsDay.2.Hereisonepossibleletter:课后答案网DearSenator:Inmypreviousletter,Iassumedthatataxcutfinancedbygovernmentborrowingwouldstimulateconsumerspending.Manyeconomistsmakethisassumptionbecausewww.hackshp.cnitseemssensiblethatifpeoplehadmorecurrentincome,thentheywouldconsumemore.Asaresultofthisincreaseinconsumption,nationalsavingwouldfall.RicardianeconomistsarguethattheseeminglysensibleassumptionthatImadeisincorrect.Althoughadebt-financedtaxcutwouldincreasecurrentdisposableincome,itwouldalsoimplythatatsomepointinthefuture,thegovernmentmustraisetaxestopayoffthedebtandaccumulatedinterest.Asaresult,thetaxcutwouldmerelygiveconsumersatransitoryincreaseinincomethatwouldeventuallybetakenback.Ifcon-sumersunderstandthis,thentheywouldknowthattheirpermanent,orlifetime,resourceshadnotchanged.Hence,thetaxcutwouldhavenoeffectonconsumption,andhouseholdswouldsavealloftheirextradisposableincometopayforthefuturetaxliability.Becausetherewouldbenoeffectonconsumption,therewouldalsobenoeffectonnationalsaving.Ifnationalsavingdidnotchange,thenaspointedoutbytheprominenteconomistyouheardfromyesterday,thebudgetdeficitwouldnothavetheeffectsIlisted.Inpar-ticular,output,employment,foreigndebt,andinterestrateswouldbeunaffectedinboththeshortrunandthelongrun.Thetaxcutwouldhavenoeffectoneconomicwell-being.ThereareseveralreasonstheRicardianargumentmayfail.First,consumerskhdaw.commightnotberationalandforward-looking:theymaynotfullycomprehendthatthecur-renttaxcutmeansafuturetaxincrease.Second,somepeoplemayfaceconstraintson若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter15GovernmentDebt151theirborrowing:inessence,thetaxcutwouldgivethesetaxpayersaloanthattheyareunabletoobtainnow.Third,consumersmayexpecttheimpliedfuturetaxestofallnotonthem,butonfuturegenerationswhoseconsumptiontheydonotcareabout.Yourcommitteemustdecidehowyouthinkconsumerswouldbehaveinresponsetothisdebt-financedtaxcut.Inparticular,wouldtheyconsumemore,ornot?Yourfaithfulservant,CBOEconomist.3.a.Wewillassumethatthelife-cyclemodelofChapter15holdsandthatpeoplewanttokeepconsumptionassmoothaspossible.Thisimpliesthattheeffectoncon-sumptionofatemporarychangeinincomewillbespreadoutoveraperson’sentireremaininglife.Wewillalsoassumeforsimplicitythattheinterestrateiszero.Considerasimpleexample.LetTbetheamountoftheone-time,temporarytaxleviedontheyoung,andletBbetheamountoftheone-timebenefitpaidtotheold,whereB=T.Ifatypicalelderlypersonhas10yearslefttolive,thenthetemporarybenefitincreasesthepresentconsumptionoftheelderlybyB/10.Ifakhdaw.comtypicalworkerhas30yearslefttolive,thentheincreaseintaxesdecreasestheirpresentconsumptionbyT/30.Aggregateconsumptionchangesbyanamount∆C=B/10–T/30=B/15.Thetransferofwealthtotheelderlycausesanetincreaseinconsumptionand,therefore,adecreaseinsaving.Thishappensbecausetheelderlyincreaseconsumptionbymorethantheworkersdecreaseit,becausetheelderlyhavefeweryearslefttoliveandthushaveahighermarginalpropensitytoconsume.b.Theanswertopart(a)doesdependonwhethergenerationsarealtruisticallylinked.Ifgenerationsarealtruisticallylinked,thentheelderlymaynotfeelanybetteroffbecauseoftheSocialSecuritybenefit,sincethetaxandbenefitincreasehasnoeffectonatypicalfamily’spermanentincome;itsimplytransfersresourcesfromonegenerationofthefamilytoanother.Iftheelderlydonotwanttotakeadvantageofthisopportunitytoconsumeattheirchildren’sexpense,theymaytrytooffsettheeffectofthetaxincreaseontheyoungbygivingthemagiftorleavingabequest.Totheextentthatthistakesplace,itmitigatestheimpactofthetax课后答案网changeonconsumptionandsaving.4.Ifgenerationsarealtruisticallylinked,generationalaccountingisnotuseful.Genera-www.hackshp.cntionalaccountinglooksatthelifetimeincomeofdifferentgenerations.Ifthesegene-rationsarealtruisticallylinked,however,whatmattersisthelifetimeincomeoftheentirefamilyline,notthelifetimeincomeofanyparticulargeneration.Forexample,anincreaseinthelifetimetaxesoftheyoungcanbeoffsetbyanincreaseinbequestsbytheold.Ifmanyconsumersfacebindingborrowingconstraints,thengenerationalaccount-ingcanbeuseful,butitisincomplete.Forexample,considerthefollowingtwopoliciesthathelptheyoung.First,cutcurrenttaxes,butkeepfutureSocialSecuritybenefitsunchanged.Second,keepcurrenttaxesunchanged,butraisefutureSocialSecuritybenefits.Thesetwopoliciesmaybeequivalentfromthepointofviewofgenerationalaccounting,whichlooksatthecombinedeffectofthepoliciesonthegeneration.Iftheyoungfacebindingborrowingconstraints,however,thenthetwopoliciesarequitedif-ferent.Inparticular,thefirstpolicyhelpstheyoungmorethanthesecondpolicydoes.5.Arulerequiringacyclicallyadjustedbalancedbudgethasthepotentialtoovercome,atleastpartially,thefirsttwoobjectionstoabalanced-budgetrulethatwereraisedinthischapter.First,thisruleallowsthegovernmenttoruncountercyclicalfiscalpolicyinordertostabilizetheeconomy.Thatis,thegovernmentcanrundeficitsdur-ingrecessions,whentaxesautomaticallyfallandexpendituresautomaticallyrise.khdaw.comTheseautomaticstabilizersaffectthedeficitbutnotthecyclicallyadjusteddeficit.Second,thisruleallowsthegovernmenttosmoothtaxratesacrossyearswhen若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 152AnswerstoTextbookQuestionsandProblemsincomeisespeciallyloworhigh—itisnotnecessarytoraisetaxratesinrecessionsortocuttheminbooms.Ontheotherhand,thisruleonlypartiallyovercomesthesetwoobjections,sincethegovernmentcanonlyrunadeficitofacertainsize,whichmightnotbebigenough.Also,acyclicallyadjustedbalancedbudgetdoesnotallowthegovernmenttosmoothtaxratesacrossyearswhenexpenditureisespeciallyhighorlow,asintimesofwarorpeace.(Wemighttakeaccountofthisbyallowinganexemptionfromthebalancedbud-getruleinspecialcircumstancessuchaswar.)Thisruledoesnotallowthegovernmenttoovercomethethirdobjectionraisedinthechapter,sincethegovernmentcannotshifttheburdenofexpenditurefromonegenerationtoanotherwhenthisiswarranted.Finally,aseriousproblemwitharulerequiringabalancedcyclicallyadjustedbudgetisthatwedonotdirectlyobservethisbudget.Thatis,weneedtoestimatehowfarwearefromfullemployment;thenweneedtoestimatehowexpendituresandtaxeswoulddifferifwewereatthisfull-employmentlevel.Noneoftheseestimatescanbemadeprecisely.6.TheCongressionalBudgetOffice(www.cbo.gov)regularlyprovidesbudgetforecasts.khdaw.comForexample,onFebruary10,2002,thewebsitehadprominentlinksto“TheBudgetandEconomicOutlook”aswellasrelatedstudies.BasedonthetestimonyoftheDirectoroftheCBO(fromalinkofftheCBOhomepage,whichtookmetohttp://www.cbo.gov/showdoc.cfm?index=3275&sequence=0&from=7),thedebtheldbythepublicisprojectedtodeclinefrom32.7percentofGDPin2001to7.4percentbytheendof2012.Severalassumptionsarenotable.First,theCBOassumesthatso-calleddiscre-tionarygovernmentspending(itemssuchasdefense,administration,andthelike,amountingtoabout1/3offederalspending)willgrowatonlytherateofinflation.Sincetheoveralleconomygenerallygrowsfasterthaninflation,thisimpliesthattheCBObuildsinasteadydeclineinfederalspendingrelativetoGDP.Second,theCBOassumesthatthetaxesinthefuturewillbewhateverlegislationcurrentlysaystheywillbe(i.e.,theCBOdoesnottakeastandonwhatchangeslegislatorsmightpassinthefuture).Third,theCBOmakesaneducatedguessaboutfutureoutputgrowth,nowprojectedat3.2percentoverthenextdecade.TheCBODirectorjustifiestheseassumptionsbynotingthat“CBO"sbaselinepro-jectionsareintendedtoserveasaneutralbenchmarkagainstwhichtomeasurethe课后答案网effectsofpossiblechangesintaxandspendingpolicies.Theyaredesignedtoprojectfederalrevenuesandspendingundertheassumptionthatcurrentlawsandpoliciesremainunchanged.Thus,theseprojectionswillalmostcertainlydifferfromactualbud-www.hackshp.cngettotals:theeconomymaynotfollowthepaththatCBOprojects,andlawmakersarelikelytoalterthenation"staxandspendingpolicies.”Itisprobablyreasonabletoassumethatpolicymakerswillincreaserealspendingondiscretionaryprogramsastheeconomyitselfgrowsovertime.Theymayalsochangetaxes,althoughthedirectionishardertopredict.IftheUnitedStatesexperiencesaproductivityslowdown,thiswillreduceoutputgrowthandhencegrowthintaxrev-enue;futuregovernmentdebtwillbelargerthancurrentlyprojected.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com CHAPTER16ConsumptionQuestionsforReview1.First,Keynesconjecturedthatthemarginalpropensitytoconsume—theamountcon-sumedoutofanadditionaldollarofincome—isbetweenzeroandone.Thismeansthatifanindividual’sincomeincreasesbyadollar,bothconsumptionandsavingincrease.Second,Keynesconjecturedthattheratioofconsumptiontoincome—calledtheaveragepropensitytoconsume—fallsasincomerises.Thisimpliesthattherichsaveahigherproportionoftheirincomethandothepoor.Third,Keynesconjecturedthatincomeistheprimarydeterminantofconsump-tion.Inparticular,hebelievedthattheinterestratedoesnothaveanimportanteffectonconsumption.khdaw.comAconsumptionfunctionthatsatisfiesthesethreeconjecturesisC=C+cY.Cisaconstantlevelof“autonomousconsumption,”andYisdisposableincome;cisthemarginalpropensitytoconsume,andisbetweenzeroandone.2.TheevidencethatwasconsistentwithKeynes’sconjecturescamefromstudiesofhouse-holddataandshorttime-series.Thereweretwoobservationsfromhouseholddata.First,householdswithhigherincomeconsumedmoreandsavedmore,implyingthatthemarginalpropensitytoconsumeisbetweenzeroandone.Second,higher-incomehouseholdssavedalargerfractionoftheirincomethanlower-incomehouseholds,implyingthattheaveragepropensitytoconsumefallswithincome.Therewerethreeadditionalobservationsfromshorttime-series.First,inyearswhenaggregateincomewaslow,bothconsumptionandsavingwerelow,implyingthatthemarginalpropensitytoconsumeisbetweenzeroandone.Second,inyearswithlowincome,theratioofconsumptiontoincomewashigh,implyingthattheaveragepropen-sitytoconsumefallsasincomerises.Third,thecorrelationbetweenincomeandcon-sumptionseemedsostrongthatnovariablesotherthanincomeseemedimportantin课后答案网explainingconsumption.ThefirstpieceofevidenceagainstKeynes’sthreeconjecturescamefromthefail-ureof“secularstagnation”tooccurafterWorldWarII.BasedontheKeynesiancon-www.hackshp.cnsumptionfunction,someeconomistsexpectedthatasincomeincreasedovertime,thesavingratewouldalsoincrease;theyfearedthattheremightnotbeenoughprofitableinvestmentprojectstoabsorbthissaving,andtheeconomymightenteralongdepres-sionofindefiniteduration.Thisdidnothappen.ThesecondpieceofevidenceagainstKeynes’sconjecturescamefromstudiesoflongtime-seriesofconsumptionandincome.SimonKuznetsfoundthattheratioofcon-sumptiontoincomewasstablefromdecadetodecade;thatis,theaveragepropensitytoconsumedidnotseemtobefallingovertimeasincomeincreased.3.Boththelife-cycleandpermanent-incomehypothesesemphasizethatanindividual’stimehorizonislongerthanasingleyear.Thus,consumptionisnotsimplyafunctionofcurrentincome.Thelife-cyclehypothesisstressesthatincomevariesoveraperson’slife;savingallowsconsumerstomoveincomefromthosetimesinlifewhenincomeishightothosetimeswhenitislow.Thelife-cyclehypothesispredictsthatconsumptionshoulddependonbothwealthandincome,sincethesedetermineaperson’slifetimeresources.Hence,weexpecttheconsumptionfunctiontolooklikeC=αW+βY.khdaw.com153若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 154AnswerstoTextbookQuestionsandProblemsIntheshortrun,withwealthfixed,wegeta“conventional”Keynesianconsumptionfunction.Inthelongrun,wealthincreases,sotheshort-runconsumptionfunctionshiftsupward,asshowninFigure16–1.Figure16–1CαwConsumption"khdaw.comαwYIncomeThepermanent-incomehypothesisalsoimpliesthatpeopletrytosmoothcon-sumption,thoughitsemphasisisslightlydifferent.Ratherthanfocusingonthepatternofincomeoveralifetime,thepermanent-incomehypothesisemphasizesthatpeopleexperiencerandomandtemporarychangesintheirincomefromyeartoyear.Theper-pmanent-incomehypothesisviewscurrentincomeasthesumofpermanentincomeYtandtransitoryincomeY.MiltonFriedmanhypothesizedthatconsumptionshoulddependprimarilyonpermanentincome:pC=αY.Thepermanent-incomehypothesisexplainstheconsumptionpuzzlebysuggestingthatthestandardKeynesianconsumptionfunctionusesthewrongvariableforincome.课后答案网Forexample,ifahouseholdhashightransitoryincome,itwillnothavehighercon-sumption;hence,ifmuchofthevariabilityinincomeistransitory,aresearcherwouldfindthathigh-incomehouseholdshad,onaverage,aloweraveragepropensitytocon-www.hackshp.cnsume.Thisisalsotrueinshorttime-seriesifmuchoftheyear-to-yearvariationinincomeistransitory.Inlongtime-series,however,variationsinincomearelargelyper-manent;therefore,consumersdonotsaveanyincreasesinincome,butconsumetheminstead.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter16Consumption1554.Fisher’smodelofconsumptionlooksathowaconsumerwholivestwoperiodswillmakeconsumptionchoicesinordertobeaswelloffaspossible.Figure16–2(A)showstheeffectofanincreaseinsecond-periodincomeiftheconsumerdoesnotfaceabindingborrowingconstraint.Thebudgetconstraintshiftsoutward,andtheconsumerincreas-esconsumptioninboththefirstandthesecondperiod.C2Figure16–2AY+∆Y22BY2AI2khdaw.comSecond-periodconsumptionOldNewbudgetconstraintbudgetconstraintI1YC11First-periodconsumptionFigure16–2(B)showswhathappensifthereisabindingborrowingconstraint.Theconsumerwouldliketoborrowtoincreasefirst-periodconsumptionbutcannot.Ifincomeincreasesinthesecondperiod,theconsumerisunabletoincreasefirst-periodconsumption.Therefore,theconsumercontinuestoconsumehisorherentireincomeineachperiod.Thatis,forthoseconsumerswhowouldliketoborrowbutcannot,con-sumptiondependsonlyoncurrentincome.课后答案网CNewFigure16–2B2budgetconstraintwww.hackshp.cnY+∆Y22BOldbudgetconstraintY2Second-periodconsumptionAI2I1YC11First-periodconsumptionkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 156AnswerstoTextbookQuestionsandProblems5.Thepermanent-incomehypothesisimpliesthatconsumerstrytosmoothconsumptionovertime,sothatcurrentconsumptionisbasedoncurrentexpectationsaboutlifetimeincome.Itfollowsthatchangesinconsumptionreflect“surprises”aboutlifetimeincome.Ifconsumershaverationalexpectations,thenthesesurprisesareunpre-dictable.Hence,consumptionchangesarealsounpredictable.6.Section16.6includedseveralexamplesoftime-inconsistentbehavior,inwhichcon-sumersaltertheirdecisionssimplybecausetimepasses.Forexample,apersonmaylegitimatelywanttoloseweight,butdecidetoeatalargedinnertodayandeatasmalldinnertomorrowandthereafter.Butthenextday,theymayonceagainmakethesamechoice—eatingalargedinnerthatdaywhilepromisingtoeatlessonfollowingdays.ProblemsandApplications1.Figure16–3showstheeffectofanincreaseintheinterestrateonaconsumerwhobor-khdaw.comrowsinthefirstperiod.Theincreaseintherealinterestratecausesthebudgetlinetorotatearoundthepoint(Y1,Y2),becomingsteeper.Figure16–3C2NewbudgetconstraintOldbudgetconstraintY2∆CBASecond-periodconsumption2课后答案网II12YCwww.hackshp.cn11∆C1First-periodconsumptionWecanbreaktheeffectonconsumptionfromthischangeintoanincomeandsub-stitutioneffect.Theincomeeffectisthechangeinconsumptionthatresultsfromthemovementtoadifferentindifferencecurve.Becausetheconsumerisaborrower,theincreaseintheinterestratemakestheconsumerworseoff—thatis,heorshecannotachieveashighanindifferencecurve.Ifconsumptionineachperiodisanormalgood,thistendstoreducebothC1andC2.Thesubstitutioneffectisthechangeinconsumptionthatresultsfromthechangeintherelativepriceofconsumptioninthetwoperiods.Theincreaseintheinterestratemakessecond-periodconsumptionrelativelylessexpensive;thistendstomakethecon-sumerchoosemoreconsumptioninthesecondperiodandlessconsumptioninthefirstperiod.Onnet,wefindthatforaborrower,first-periodconsumptionfallsunambiguouslywhentherealinterestraterises,sinceboththeincomeandsubstitutioneffectspushinkhdaw.comthesamedirection.Second-periodconsumptionmightriseorfall,dependingonwhich若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com Chapter16Consumption157effectisstronger.InFigure16–3,weshowthecaseinwhichthesubstitutioneffectisstrongerthantheincomeeffect,sothatC2increases.2.a.WecanuseJill’sintertemporalbudgetconstrainttosolvefortheinterestrate:C2Y2C1+=Y1+1+r1+r$100$210$100+=$0+1+r1+rr=10%.Jillborrowed$100forconsumptioninthefirstperiodandinthesecondperiodusedher$210incometopay$110ontheloan(principalplusinterest)and$100forconsumption.b.TheriseininterestratesleadsJacktoconsumelesstodayandmoretomorrow.Thisisbecauseofthesubstitutioneffect:itcostshimmoretoconsumetodaythantomorrow,becauseofthehigheropportunitycostintermsofforgoneinterest.Thiskhdaw.comisshowninFigure16–4.Figure16–4C2210B100课后答案网AConsumptiontomorrowwww.hackshp.cn100191C1ConsumptiontodayByrevealedpreferenceweknowJackisbetteroff:atthenewinterestratehecouldstillconsume$100ineachperiod,sotheonlyreasonhewouldchangehisconsumptionpatternisifthechangemakeshimbetteroff.khdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com 158AnswerstoTextbookQuestionsandProblemsc.Jillconsumeslesstoday,whileherconsumptiontomorrowcaneitherriseorfall.Shefacesbothasubstitutioneffectandincomeeffect.Becauseconsumptiontodayismoreexpensive,shesubstitutesoutofit.Also,sinceallherincomeisinthesec-ondperiod,thehigherinterestrateraiseshercostofborrowingand,thus,lowersherincome.Assumingconsumptioninperiodoneisanormalgood,thisprovidesanadditionalincentiveforloweringit.HernewconsumptionchoiceisatpointBinFigure16–5.Figure16–5C2200khdaw.comA100ConsumptiontomorrowB100182C1ConsumptiontodayWeknowJillisworseoffwiththehigherinterestratesbecauseshecouldhave课后答案网consumedatpointBbefore(bynotspendingallofhersecond-periodmoney)butchosenottobecausepointAhadhigherutility.3.a.Aconsumerwhoconsumeslessthanhisincomeinperiodoneisasaverandfaceswww.hackshp.cnaninterestraters.HisbudgetconstraintisC1+C2/(1+rs)menucost.Inmakingthisdecisionitisignoringthecostofthehigherpricestoconsumersurplus.Societywouldbebetteroffadjustingpricesifthetotalsocialloss,C+E,weregreaterthanthemenucost.Inotherwords,whenmenucostsarepresentmonopolistswillnotdownwardlyPriceFigure19–3khdaw.comAP1BCP0DEMCDMR课后答案网Q1Q0Quantityadjusttheirpricesoftenenough.www.hackshp.cnkhdaw.com若侵犯了您的版权利益，敬请来信通知我们！℡www.khdaw.com'