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    This document contains questions for a macroeconomics tutorial covering topics 4 & 5. The questions address: 1) Using regression lines to predict unemployment rates from economic growth rates in different countries. 2) Comparing economies that differ only in the share of credit-constrained households, and how this would affect their multiplier. 3) How a reduction in fiscal spending by the government during an aggregate demand-driven boom would impact the economy.

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    This document contains questions for a macroeconomics tutorial covering topics 4 & 5. The questions address: 1) Using regression lines to predict unemployment rates from economic growth rates in different countries. 2) Comparing economies that differ only in the share of credit-constrained households, and how this would affect their multiplier. 3) How a reduction in fiscal spending by the government during an aggregate demand-driven boom would impact the economy.

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    4 views2 pages

    Tutorial 3 SS 2023

    Uploaded by

    kerjanikololo
    This document contains questions for a macroeconomics tutorial covering topics 4 & 5. The questions address: 1) Using regression lines to predict unemployment rates from economic growth rates in different countries. 2) Comparing economies that differ only in the share of credit-constrained households, and how this would affect their multiplier. 3) How a reduction in fiscal spending by the government during an aggregate demand-driven boom would impact the economy.

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    © All Rights Reserved
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    of 2

    Macroeconomics II

    Tutorial 3
    Topics 4 & 5

    Martin-Luther-University Halle-Wittenberg
    Chair of Economic Growth and Development

    Teacher: Prof. Wolf-Heimo Grieben - Tutor: Adeel Ahmad Dar - Date: June 6, 2023

    Questions

    1. a) Using the regression lines or the lines of best fit in the figure given below, what prediction
    does the regression line show for unemployment when the economy is not growing? Are
    the results similar for all the countries?

    b) Assume that the population and technology (separate cases) in the economy are growing.
    Can you use this assumption to explain your results in part a)? What else might explain
    the differences between countries?

    1
    2. a) Compare two economies, which differ only in their share of creditconstrained households
    but are identical otherwise. In which economy is the multiplier larger? Illustrate your
    answer using a diagram.

    b) On the basis of your comparison of the two economies, would you expect the multiplier in
    an economy to vary over its business cycle?

    c) An economy is observing a boom phase during a business cycle which is caused by a rise
    in aggregate demand. Provided this phase, the government plans to reduce fiscal spending.
    How these changes will affect the economy? Illustrate your answer using a diagram

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