# Econ 200 Writing Assignment

There are the details. also i put them in file blow. Assignment due date is 48 hours from now.

Complete answers should be typed or hand written and provided on a separate sheet of paper. (I.e.: do not put answers on this sheet.) Staple your work to this sheet when submitting the assignment. Fully label all parts on your answer sheets.

Part 1: CH 15, Unemployment (6 points) Imagine the following economy profile (for civilian, non-institutionalized adults): (M = Million). Use this information to answer the following questions. For parts (a) and (b), you must show your work and write out your answers in full and complete sentences/paragraphs.

Men – 120M are employed; 10M are unemployed; and 10M are not in the labor force. Women – 70M are employed; 5M are unemployed; and 50M are not in the labor force.

(a) Solve for the Men’s Unemployment Rate, the Women’s Unemployment Rate and the Unemployment Rate of the overall economy. In a brief paragraph, explain what these figures imply about the underlying economy.

(b) Solve for the Men’s Labor Force Participation Rate (LFPR), the Women’s LFPR, and the LFPR of the overall economy. In a brief paragraph, explain what these figures imply about the underlying economy.

Part 2: CH 16: The Monetary System (10 points) Consider the following profile of a fictitious economy: Assume that there are 1 Million people. Initially there are no banks and there is \$5Million in coins and dollars held by the people in society.

(1) What is the initial Money Supply for this economy? How much is in currency and how much is in demand deposits? Explain your answer fully using complete sentences.

(2) Assume now that there are now 100 banks in the economy, and each one practices 100% reserve banking. Given these new institutions, what is the effect on the (i) money supply (MS) and (ii) the decomposition of the Money Supply (i.e., how much is in currency and demand deposits)? Explain fully using complete sentences. Note, you should provide an answer that is flexible enough to allow people to deposit as much or as little money in the banks as they want to.

(3) Now assume that a central bank is established, and behaves similarly to the U.S. Federal Reserve System. The central bank encourages banks to engage in fractional reserve banking and sets the Reserve Requirement at 20%. As a result, all banks hold only the required reserves in their vaults. What are the Reserve Ratio and the Money Multiplier in this scenario? If all possible banking cycles were exhausted, what would the Money Supply be for this economy (and what would its decomposition be – i.e.: currency vs. demand deposits)? Show your work and explain your answer fully using complete sentences. … continues on back…
Econ 221 Writing Assignment – 16 pts. K. Jaber
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(4) Now assume that the central bank wants to further encourage economic activity (i.e. trade) in this society. (i) Would the central bank engage in expansionary or contractionary monetary policy to accomplish this? (ii) Identify an appropriate monetary policy (use its proper name) and explain how it works. (iii) Identify the role of the Central Bank, the individual banks, and the people in the economy in the playing out of this policy. (iv) Explain how such a policy would (theoretically) encourage economic activity. (v) Finally, what would be the corresponding effects on other macroeconomic variables (such as GDP, unemployment, etc.)? Fully explain your answer in complete sentences. Be as thorough as possible