Modern Principles: Macroeconomics
3rd Edition
ISBN: 9781429278409
Author: Tyler Cowen, Alex Tabarrok
Publisher: Worth Publishers
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Chapter 14, Problem 3FT
To determine
The people who “intertemporally substitutes” their jobs.
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Some economists argue that the "animal spirits" of investors are so important in determining the level of investment in the economy that interest rates do not matter at all.
Part 2
a. Suppose that this were
truelong dash—that
investment in no way depends on interest rates.
Using the line drawing tool, show what the investment curve would look like. Label the line 'I'.
is my answer correct?
Problem 3
ABC Challenges: Attrition, Balance and Compliance
Can television inform people about public affairs? Political scientists Bethany Albertson and
Adria Lawrence (2009) conducted an experiment in which they randomly assigned people to
treatment and control groups to evaluate the effect of watching TV on a person's information
level. Those assigned to the treatment group were told to watch a specific television
broadcast and were later asked questions related to what they watched. Those in the control
group were not shown the TV broadcast but were asked questions related to the material in
the TV broadcast.
The dataset contains the following variables:
•
•
•
•
•
•
Read News: Dummy variable which =1 if a person reads news and 0 otherwise.
Political Interest: interest in political affairs (not interested=1 to very
interested=4)
Education: years of education
Female: female dummy variable (female=1; male=0)
Income: family income in thousands of dollars
Information Level: information…
The figure to the right gives an economy's initial aggregate demand (AD) curve.
Using the line drawing tool, show an increase in aggregate demand. Properly label this line.
Part 2
Note: Carefully follow the instructions above and only draw the required object.
Part 3
Which of the following will generate an increase in aggregate demand?
A.
A decrease in the price level.
B.
A decrease in the money supply.
C.
Increased government expenditures for war.
D.
A tax increase.
Chapter 14 Solutions
Modern Principles: Macroeconomics
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