I officially began the A.E. Project today. I spent most of the morning at a nice cafe in Dempsey Hill, reading the course textbook on my wife's tablet. Yesterday, I discussed the potential downside of buying a Kindle eTextbook and needing a separate device other than my smartphone to read on, but today worked out just fine and, overall, it was an enjoyable experience.
I read through all of chapter one today, although the class syllabus technically just asks that you skim the chapter. I plan to read all or most of the chapters, regardless of the syllabus, since I am spending the money on the full textbook and not just sections of it! Just because the syllabus doesn't ask me to learn the material, doesn't mean I can't anyway. There are 18 chapters in this book, so it'll take about 18 days to get through. Of course there are other course readings as well.
A few selected answers from questions at the end of the chapter are below. I have typed the initial question from the book in bold to begin my answers.
Questions for Review
1. The primary defining characteristic of macroeconomics is that it focuses on the behavior of large collections of economic agents. It focuses on the aggregate behavior of consumers and firms, the behavior of governments, the overall level of economic activity in individual countries, the economic interactions among nations, and the effects of fiscal and monetary policy.
6. In a graph of the natural logarithm of an economic time series, the slop of the graph represents a good approximation to the growth rate of Yt (an observation on an economic time series), when the growth rate is small.
11. The five elements that make up the basic structure of a macroeconomic model are the consumers and firms that interact in the economy, the set of goods that consumers wish to consume, consumers' preference over goods, the technology available to firms for producing goods, and the resources available.
17. The principal effect of an increase in government spending is a crowding out of private economic activity. That is, the government competes for resources with the rest of the economy.
2. If I could turn back the clock to the time of the Great Depression, the experiment I would like to run on the U.S. economy would be to see the economic growth of the United States if only Democrats or only Republicans held office until present day. I am curious to see how the economy would fare if the decision makers were acting on one set of continuous core beliefs without the schizophrenia accompanied by the switching back and forth of two parties.
4. In Figure 1.6, unemployment changes more rapidly when it is increasing. Although, it doesn't appear to be a large difference. The rise and fall happen fairly symmetrically. Based on previous experience, the unemployment rate will again reach 4% after the 2008-2009 recession some time around 2020-2025.
8. In Figure 1.13, the severity of the 2008-2009 recession relative to previous recessions is about -3.5% deviation from trend in real GDP. This makes it more severe than the 1990-1991 and 2001 recessions, but less severe than the 1974-1975, 1981-1982 recessions, and of course the Great Depression.