Chapter 7.A, Problem 2AQ

17.  In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all.  Explain the difference between present value and future value. Be sure to use and explain the mathematical formulas for both. How does one interpret these formulas?

12. Give the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all.  Show and carefully explain the Taylor rule and all of its components, used as a monetary policy guide.

20.  In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all.  What is meant by the Federal Reserve’s new term “ample reserves”? What may be hidden in this new formulation by the Fed?

14. In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all.   What is the Keynesian view of fiscal policy and why are some economists skeptical?

16. In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all.    Describe a bond or Treasury security. What are its components and what do they mean?

13. In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all.  Where does the government get its funds that it spends? What is the difference between federal debt and federal deficit?

11. In a paragraph, no bullet, points please answer the question and follow the instructions. Give only the solution: Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all.  Why is determining the precise interest rate target so difficult for the Fed?

Problem 1 Regression Discontinuity In the beginning of covid, the US government distributed covid stimulus payments. Suppose you are interested in the effect of receiving the full amount of the first stimulus payment on the total spending in dollars by single individuals in the month after receiving the payment. Single individuals with annual income below $75,00 received the full amount of the stimulus payment. You decide to use Regression Discontinuity to answer this question. The graph below shows the RD model. 3150 3100 3050 Total Spending in the month after receiving the stimulus payment 2950 3000 74000 74500 75000 75500 76000 Annual income a. What is the outcome? (5 points) b. What is the treatment? (5 points) C. What is the running variable? (5 points) d. What is the cutoff? (5 points) e. Who is in the treatment group and who is in the control group? (10 points) f. What is the discontinuity in the graph and how do you interpret it? (10 points) g. Explain a scenario which can…

Problem 2 Difference-in-Difference In the beginning of 2005, Minnesota increased the sales tax on alcohol. Suppose you are interested in studying the effect of the increase in sale taxes on alcohol on the number of car accidents due to drinking in Minnesota. Unlike Minnesota, Wisconsin did not change the sales tax on alcohol. You decide to use a Difference-in-difference (DID) Model. The numbers of car accidents in each state at the end of 2004 and 2005 are as follows: Year Number of car accidents in Minnesota Number of car accidents in Wisconsin 2004 2000 2500 2005 2500 3500 a. Which state is the treatment state and which state is the control state? (10 points) b. What is the change in the outcome for the treatment group between 2004 and 2005? (5 points) C. Can we interpret the change in the outcome for the treatment group between 2004 and 2005 as the causal effect of the policy on car accidents? Explain your answer. (10 points) d. What is the change in the outcome for the control…