Completed quickly and followed instructions given. Grammar, spelling, etc. was all good as well. Thank you so much! Will hire in the future.
1. Show that for an economy where the growth rate of GDP is zero, to keep its debt-GDP ratio constant, the government must run a primary surplus equal to the interest payments on its outstanding debt.
2. Explain how an acceleration of the GDP growth rate could have contributed to the fall in the debt-GDP ratio during the 1990’s.
3. Consider the money supply model that we discussed in class. (a) Show that we can express the money multiplier m =M/B as m =cr+1/cr+rr. (b) What is the value of m under 100% reserve banking? (c) What is the value of m if depositors keep all their cash in their bank accounts as deposits? Provide some intuition for your result. (d) Describe how bank failures during a financial crisis could adversely affect the money multiplier.
4. Consider the unemployment model. (a) Show that U/L =1/(1+f /s) . (b) Imagine that the government provides new funding for re-training programs to re-train former workers displaced by workplace automation. Explain how this might impact the unemployment rate, referring to the equation above.
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