It’s Crunch Time

Well, folks, we’ve cracked the barrier of one month to go. 30 days until my return to North Carolina, and I’ll tell you what, it sure is weird to think about. I know of several people who started studying abroad for spring semester who are either already back home or soon on their way. I’m pretty sure, with one exception, that I was the first one gone and will be the last one to leave. Bittersweet? I do not think there is a better word to describe it.

2 weeks and 2 days until exam hell is over. For the next 8 days I will be concluding revision for all courses. My exam schedule is really annoying because I have so little time in between each to study.

May 17-24 will be cram time. I’m going to try to be as far from communication as possible. As I wrote in an earlier post, my exams are on the 25, 28, 30 and 1. The two days that fall between the Macro exam and Research Methods will be devoted to Micro and Research Methods cramming. Once Research Methods is done, I have one day for Social Policy outlining for essays. The next day will be final cramming for Micro and the first day of June will be the Micro exam.

June 1 will be the end and the start of a simultaneously happy and depressing two weeks until home. I don’t plan packing honestly until the day or two before I fly home because I see it as a waste of time. Maybe I will pack a little but every night before I go to bed.

2 weeks Kerry, that is all you need to do. Push harder for two weeks and then you can relax.

Let’s Talk About Uni.

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?