Homework Answers
1) Nominal national income measures the national income at current yea prices with no adjustments made for the rate of inflation over the years
For example if the nominal income in current year is $20000 and will rise by 10% in the next year then the the nominal income in the next year will be $22000.
Real national income measures the national income at the constant or base year prices and so it is adjusted for the rate of inflation.Here,the volume of output is measured at a base year price and so the real value of the output is measured without the effect of rise in prices due to inflation.
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Question 2 (a) Explain the difference between nominal exchange rate and real exchange rate (6) As mentioned in clas...
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6. Explain the difference between "real" and "nominal" effects concerning monetary policy and its effect on...
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In your own words, what is the difference between "real GDP growth" and "nominal GDP growth"...
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Chapter 10 - The Business Cycle True / False Questions 26. Macroeconomics focuses on individual firms and industries. 27. Macroeconomics is the study of the economy as a whole. 28. A basic purpose of macroeconomics is to explain monopoly behavior. 29. The business cycle is the alternating periods of economic growth and contraction 30. The basic measures of macroeconomic performance include the national debt, the trade deficit, and interest rates, 31. An important measure of macroeconomic performance is the growth...
Question 2 (a) Explain the difference between nominal exchange rate and real exchange rate (6) As mentioned in class, the Big Mac Index is a numerical tool for assessing disparities in consumer purchasing power between countries. Suppose that the Big Mac costs 7.50 Canadian dollars in Canada and 5.50 US dollars in the US. Suppose that the nominal exchange rate is 1.2 Canadian dollars to 1 US dollar. (i) Calculate the real exchange rate. (ii) Is the Canadian dollar undervalued...
b) (2 points) What is the difference between nominal interest rate and real interest rate? Does the central bank control the real or the nominal rate? What do we assume in our model? Financial Frictions in the short run model a) (2 points) What do you expect would happen to the economy when spreads increase? Specifically, what would happen to output and inflation during the period of the increase in spreads? b) (2 points) How do you think would the...
6. Explain the difference between "real" and "nominal" effects concerning monetary policy and its effect on the economy.
1,3 and the second part of 4 i dont understand
pinay, dinini 1. Contrast the economic growth and business cycles. 2. What are the three primary measures used in macroeconomics to assess the performance of an economy? Real GDP: Provides an overall indicator of output or production in the economy Unemployment: Measures the degree to which labor resources are being fully used Inflation: The increase of prices in the economy 3. The three major indicators of the health and development...
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