macroeconomic 16

Problem 1

Suppose GDP equals $300 trillion, consumption equals $24 trillion, the government spends $3 trillion and has a budget deficit of $500 billion.

  • Find public saving, taxes, private saving, national saving, and investment.

Problem 2

You take $500 that you held as currency and put it into the banking system. The reserve ratio is equal to 20%.

  • Calculate the money multiplier.
  • By how much will increase the total amount of deposits in the banking system?
  • By how much will increase the money supply?

Problem 3

At the begening of 2018, a town has 152,000 employed people and 8000 unemployed people. The remaining 40,000

people in the town are not in the labor force.

Based on these numbers:

  • Calculate the town’s unemployment rate
  • Calculate Suppose that 10,000 people decide to join the labor force. Of these 10,000 people 7,800 find jobs. What is the unemployment rate at the end of 2018?
  • Calculate the town’s labor force participation rate

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