EBK MACROECONOMICS
21st Edition
ISBN: 8220103959902
Author: McConnell
Publisher: YUZU
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Question
Chapter 22, Problem 11DQ
To determine
The obstacles to the growth of income per capita in DVCs
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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.
Problem 2
Experiments/Randomized Control Trial
Suppose you are interested in studying the effect of academic counselling on the years it
takes for a student to obtain an undergraduate degree. You conduct a randomized control
trial to answer the question. You randomly assign 2500 individuals in a university in New
York to receive academic counselling and 2500 students to not receive any academic
counselling.
a. Which people are a part of the treatment group and which people are a part of the
control group? (5 points)
b. What regression will you run? Define the variables where required. (5 points)
Λ
c. Suppose you estimate ß₁ = -0.3. Interpret it. (5 points)
1
d. You test for balance using the variables mentioned in the table below. Based on the
results do you think that the treatment and control group are balanced? If your
answer is "yes" then explain why. If your answer is "no", then explain why and mention
how will you address the issue of imbalance. (10 points)
Variable
GPA
Average…
Problem 1
Experiments/Randomized Control Trial
Suppose you are interested in studying the effect of being a part of the labor union on an
individual's hourly wage.
You collect data on 1000 people and run the following regression.
Wage=Bo+B₁Labor Union; + &¿
where Labor Union is a dummy variable which is equal t to 1 for people who are a part of
labor union and 0 for others.
a. Suppose you estimate
b. Do you think
B₁ = 1.6. Interpret B₁ (5 points)
1
1
is biased or unbiased? Explain. (5 points)
Now suppose you conduct a randomized control trial to answer the same question. You
randomly assign some individuals to be a part of the labor union and others to not be a part
of the labor union. The first step you take is to ensure that the randomization was done
correctly. Then you estimate the following equation:
=
Wage, Bo+B₁Treatment; + &;
Treatment =1 if the student is assigned to be a part of Labor Union
Treatment=0 if the student is assigned to not be a part of Labor Union
c. Why is it…
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- The figure to the right contains a point indicating the economy's initial price and aggregate output (Upper P 0P0,Upper Y 0Y0) combination. Suppose that the price level rises such that P Subscript 1 > P Subscript 0. Using the point drawing tool, identify a potential location for the economy's new price and aggregate output (Upper P 1P1,Upper Y 1Y1) combination. Label this point B. Using the line drawing tool, draw the aggregate demand curve through these points. Properly label the line. picture is attachedarrow_forwardQuestion content area left Part 1 The figure to the right gives an economy's initial aggregate demand (AD) curve. Using the line drawing tool, show a decrease 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 a decrease in aggregate demand? A. Increased government expenditures for infrastructure. B. A tax increase. C. An increase in the price level. D. An increase in the money supply.arrow_forwardA movie theater is showing two different movies: a Hollywood blockbuster (with 100 customers willing to pay $10 for a ticket, and 100 willing to pay $8) and an independent film that attracts 50 film buffs, willing to pay $20 each. Marginal costs are zero and neither movie can fill theater capacity. What is the theater's maximum profit if it cannot price discriminate (it must charge the same price for both movies) and if it can price discriminate (it may charge different prices for different movies)? a. $2,000; $2,600 b. $1,500; $2,100 c. $1,500; $2,000arrow_forward
- A movie theater is showing two different movies: a Hollywood blockbuster (with 100 customers willing to pay $10 for a ticket, and 100 willing to pay $8) and an independent film that attracts 50 film buffs, willing to pay $20 each. Marginal costs are zero and neither movie can fill theater capacity. What is the theater's maximum profit if it cannot price discriminate (it must charge the same price for both movies) and if it can price discriminate (it may charge different prices for different movies)? a. $2,000; $2,600 b. $1,500; $2,100 c. $1,500; $2,000arrow_forwardWhat profi is most important in business ?arrow_forward5. Download the Excel sheet from Brightspace. The data contains the GDP per capita and GNI per capita of OECD member countries in 2014 (both figures are reported in US dollars). The countries are ranked by GDP per capita. a. Compute the ratio of GNI to GDP for each country (GNI per capita/GDP per capita). What does this imply about net factor income from abroad for each country? b. Rank the countries based on the GNI/GDP ratio, starting with the country with the highest ratio and ending with the country with the lowest ratio. Which country has the highest ratio, and which has the lowest? c. Comment on why the countries you identified in the previous question have a large difference between GDP and GNI? What does the difference imply?arrow_forward
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