My first exam was Friday, Macroeconomic Principles, and it actually went alright. I told all of my friends after the exam that if anyone brought up Macro after the exam I would punch them in the face, so I am not going to talk about it. Just glad that it’s over! Goodbye Macro.
Next exam is on Monday, Social Science Research Methods for Management, so lets give it a goooooooo.
Officially 3 weeks until my venture back to the homeland as of yesterday, so now it’s 2 weeks and 6 days which is even more weird. As each day goes by, my heart jumps with the prospect of coming home to everything that is America, but sinks a little with the thought of leaving my life in London. I don’t quite know how to feel about it. When I figure out the words, I’ll let you know.
On the bright side, literally, the weather is AMAZING and it makes me so happy.
Want to work your brain a bit? Here’s the Macroeconomics Problem Set for this week. Enjoy!
1. Government spending in the CIA model:
a. Summarise the effects on output and employment of a temporary increase in government expenditure in the cash-in-advance model that is financed through lump-sum taxes.
b. How does your answer change if the government decides to pay for the increase in spending by an (unexpected) one-time increase in the money supply instead?
c. Finally, how does your answer change if the government finances the increase in spending by permanently raising the growth rate of the money supply.
2. The zero bound on nominal interest rates: Use the money demand model discussed in lectures to answer the following questions. Suppose we have an economy in which the nominal interest rate is currently zero (i.e. R=0).
a. What is the equilibrium quantity of credit card balances in this economy?
b. What is the equilibrium quantity of money demand in this economy? (Hint: Consider whether the transaction constraint is binding or not.)
c. In what sense does the economy run more efficiently when R=0 rather than with R>0?
3. The Friedman rule: Suppose that consumers are concerned about theft, so they want to use credit card services for some of their transactions even if the nominal interest rate is zero. How would the Friedman rule for monetary policy be altered under those circumstances?
Posted in LSE
Tagged answer change, credit card balances, economics, friedman rule, GC, General Course, LSE, lump sum taxes, Macroeconomics, nominal interest rate, nominal interest rates, Uni
I realize that I have been massively ineffective at updating but I swear I have a good excuse. This has been one of the craziest weeks of my life. New friends, new habits, new everything. It has been absolutely incredible. But I will be making a new vlog hopefully by the middle of next week highlighting random LSE things as well as our GC trip to Stonehenge and Bath this weekend. I also have to upload the Scotland vlog which I have yet to edit, but expect that within the next couple of days.
On the brighter side, lectures have started! What an incredible institution this is. I am loving the intensity that the LSE requires, because I have to push myself so much further than I ever have academically. This week is going to be full of several lectures of classes that I know I will be taking but also some that I might audit or switch into. More details on selected classes next week.
So far I have only been to three lectures (Macroeconomics, Social Science Research Methods for Management, and Internationalization of Economic Growth) and all have copious amounts of reading required. It’s going to be an intense year.
SO LOOKING FORWARD TO IT.