Transcript Problems_072907_NoNo..

Problems
Chapters 3,5,7
List of Suggested Problems
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Chapter 3
Numerical Problems: 3a,b 4a
Analytical Problems: 2
Chapter 4
Numerical Problems: 2a,b
Analytical Problems: 7
Chapter 7
Numerical Problems: 1a, 3a
Analytical Problems: 1
Chapter 3 Numerical Problem
3, Parts a,b
N
Y
MPN
MRPN (P = 5)
MRPN (P = 10)
1
8
8
40
80
2
15
7
35
70
3
21
6
30
60
4
26
5
25
50
5
30
4
20
40
6
33
3
15
30
Chapter 3 Numerical Problem
4a
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The marginal product of labor is given by
the equation below:
MPN  A(100  N )
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The price of output is $2 per unit
What is the quantity of labor demanded if
A=1 and the nominal wage is $10?
Chapter 3 Numerical Problem
4a (continue)
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Profit maximization requires that labor be hired
to the point where MRPN is just equal to W:
MRPN  2 1100  N   W
MRPN  2 1100  N   10
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Solve for N: N = 95
Plot the demand for labor:
2  1100  N   W
Chapter 3 Analytical Problem 2
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What are the effects of each event on the
output?
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A large number of immigrants arrive in the country
(lower)
Energy supplies become depleted (lower)
New teaching techniques improve the educational
performance of high school seniors (higher)
The new law mandates the shutdown of some
unsafe forms of capital (lower)
Chapter 4 Numerical Problem
2, Parts a,b
MPKf
# Fabricators
Output
0
1
0
100
—
100
2
3
4
150
180
195
50
30
15
5
6
205
210
10
5
Chapter 4 Analytical Problem 1
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For this question you are asked to use the saving
investment diagram to analyze the effects of
different events on saving investment in the real rate
of interest.
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Consumers decide to save more
The government announces a large one-time bonus
payment to veterans returning from a war to be financed by
future taxes
Government introduces an investment tax credit, but
changes other taxes of total tax collections remain
unchanged
A large number of oil deposits are discovered increasing
the marginal product of capital and expected future income
Chapter 7 Numerical Problem 1
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This problem simply involves plugging
numbers into the money demand function
I will refer you to the answers that have been
posted; I will not cover it in this review
Chapter 7 Numerical Problem
3a
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We are told that the quantity theory holds and
that velocity is constant at 5, output is fixed at
its full employment value of 10,000, and the
price level is equal to 2.
Determine the real demand for money and
the nominal demand for money
Chapter 7 Numerical Problem
3a
MV  PY
M  5  2  10, 000
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Solve for M; M = 4000
Solve for M/P; M/P=2000
Chapter 7 Analytical Problem 1
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What are the effects of each on the demand
for M1? The demand for M2?
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Money market mutual funds become more
checkable
Checkable home equity lines of credit are
introduced
The stock market crashes—further declines are
feared
Banks introduce overdraft protection featuring
automatic savings to checking transfers
A crackdown reduces the illegal drug trade occurs
The End