Helicopter Money Economist Approach Case Study
Order ID:89JHGSJE83839 Style:APA/MLA/Harvard/Chicago Pages:5-10 Instructions:
Helicopter Money Economist Approach Case Study
Questions are short-answers questions. Please provide a complete explanation (wherever necessary) and show full working of the solution in numerical questions.
- Economists occasionally speak of “helicopter money” as a shorthand approach to explaining increases in the money supply. Suppose the chair of the Federal Reserve flies over the country in a helicopter, dropping 10,000,000 newly printed $100 bills (a total of $1 billion). By how much will the money supply increase in the following scenarios, holding everything else constant?
- all of the new bills are held by the public as currency?
- allofthenewbillsaredepositedinbanksthatchoosetohold10percentoftheirdepositsasreserves (and no one in the economy holds any currency)?
- all of the new bills are deposited in banks that practice 100-percent-reserve banking?
- people in the economy hold half of their money as currency and half as deposits ,while banks choose to hold 10 percent of their deposits as reserves?
- Construct a bank balance sheet with the following items: reserves, deposits, and loans. Choose values so that the reserve–deposit ratio is 10 percent.
- a. Suppose a government decides to reduce its spending and (lump-sum) income taxes by the same
amount. Using the long-run model of the economy developed in Chapter 3, graphically illustrate the impact of the equal reductions in spending and taxes. Be sure to label the axes, the curves, the initial equilibrium values, the direction curves shift, and the terminal equilibrium values.- State in words what happens to (i) the real interest rate; (ii) national saving; (iii) investment; (iv) consumption; and (v) output.
- Suppose a government has a tax revenue shortfall. Will hyperinflation inevitably follow unless the government cuts its fiscal expenditures?
- Assume that the production function is given by Y = AK L , where Y is GDP, K is capital stock, and L is labor. The parameter A is equal to 10. Assume also that capital is 100, labor is 400, and both capital and labor are paid for their marginal products.
- What is Y?
- What is the real wage of labor?
- What is the real rental price of capital (the amount of output paid per unit of capital)?
- As the U.S. economy approached the millennium, January 1, 2000, many people cautiously began to hold larger than normal quantities of currency as protection against a possible disruption of banking services that could result from computer glitches.
- How did this greater preference for currency affect the money supply?
b. How could the Federal Reserve offset such an increase in currency preferences?- The production of an economy is explained by a function Y = 20 (L.5K.5), where L is labor and K is capital with L = 400 and K = 400. Does this economy support constant returns to scale?
- “Some economists believe that the large decline in the money supply was the primary cause of the Great Depression of the 1930s.” Explain how this can be the case.
RUBRIC
Excellent Quality
95-100%
Introduction 45-41 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Literature Support
91-84 points
The background and significance of the problem and a clear statement of the research purpose is provided. The search history is mentioned.
Methodology
58-53 points
Content is well-organized with headings for each slide and bulleted lists to group related material as needed. Use of font, color, graphics, effects, etc. to enhance readability and presentation content is excellent. Length requirements of 10 slides/pages or less is met.
Average Score
50-85%
40-38 points
More depth/detail for the background and significance is needed, or the research detail is not clear. No search history information is provided.
83-76 points
Review of relevant theoretical literature is evident, but there is little integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are included. Summary of information presented is included. Conclusion may not contain a biblical integration.
52-49 points
Content is somewhat organized, but no structure is apparent. The use of font, color, graphics, effects, etc. is occasionally detracting to the presentation content. Length requirements may not be met.
Poor Quality
0-45%
37-1 points
The background and/or significance are missing. No search history information is provided.
75-1 points
Review of relevant theoretical literature is evident, but there is no integration of studies into concepts related to problem. Review is partially focused and organized. Supporting and opposing research are not included in the summary of information presented. Conclusion does not contain a biblical integration.
48-1 points
There is no clear or logical organizational structure. No logical sequence is apparent. The use of font, color, graphics, effects etc. is often detracting to the presentation content. Length requirements may not be met
You Can Also Place the Order at www.collegepaper.us/orders/ordernow or www.crucialessay.com/orders/ordernow Helicopter Money Economist Approach Case Study