Homework 1

1. What macroeconomic issues have been in the news lately?

Lately, all over media is descused the same problem, COVID-19 an epidemy that afects the entire
world and as a result the mondial economy. Here we are talking about stagflation so- nobady
works , the borders ar crosed just for special needs and because of the safety protocol we are in the
state of carantine and isolation so, the market suffers a lot from it, no import , no export no
economic relations just those that are ment for the safety – medical care , security .
After that we are talking allso about what is going to happen after it, the public finances are going to
change a lot, the taxes are going to become bigger to cover the deficit of the budget and the entire
population is going to have cuts in salaries and things like this so what the states are and will be
asking of us is to be patient solitare with everybody around us and than reorganize and put the
economy back on the fit again
This tragedi is not the only thing out there , there are words of an war that is comming soon as the
dolar and euro is certainly debalancede an in danger of an colaps so people are thinking of a 3 world
war between SUA ,EUROPE and RUSSIA and China which belive in restoring the golde ethalon so
they are buying a lot of gold while USA is storring its army on european lands as i am writing , just
yesterday Russia has repatreated its citizens from Moldova so they woul be safe and take care of
because of the epidemy but nobady is blind there is something going on here a economic war
between the most powerful states in the world to gain oe mentain power and teh epidemy as a good
practice in the history as well comes just to cover all the facts and make people blind the population
problem benefits from this as old people die and only the strong ones resist and China gaind
ultimate power over their economy through this as all the shares of foreign shareholders most of
them americans were bought with a very low price and now they can go to the next steps for war or
developement restructure the economy, mentaining controland why not, their monetary unit could
become bigger than the dolar an euro if the cards are payd well.

2. What do you think are the defining characteristics of a science? Does the
study of the economy have these characteristics? Do you think macroeconomics
should be called a science? Why or why not?
Science is a very important subject which has the porpose of studing , observing fenomens dry
conclusions and make conclusions give thoughts , solve problems , analizing situations, so yes the
study of economics incuds them all and so macroeconomics shouldnt just be called a science, it is
one as it studies the fenomena of macro economical problems and analises every detail in order to
find solutions for them an to obtain economic grouth as a result

3. Use the model of supply and demand to explain how a fall in the price of frozen yogurt would
affect the price of ice cream and the quantity of ice cream sold. In your explanation, identify them
exogenous and endogenous variables.
The yogurt and the icecreem are substitutes so, they are sutisfiing the same need for the buyer so if
the price of yogurt falls , than the consumers behaviour says that people will buy more yogurt and
less ice creem. The endoginious remain to be the Qd and Qs and the price of cour so the price fall of
the yougurt and the exoginious ones are the price of the imput the icecreem and yogurt and the
agregated income.

4. How often does the price you pay for a haircut change? What does your
answer imply about the usefulness of market-clearing models for analyzing the
market for haircuts?
It doesn’t change a lot mabe every halth a year and not by much , is just the inflation raising or
sometimes the demand becomes bigger so they can afford to rise the prices becouse thre will be
costumers anyway. Market-clearing models for analyzing the market for haircuts shows how
various events affect the price of the services so they are very usefull for a better understanding of
the reason in the price changing .

5. Which of the following questions are relevant for the study of

macroeconomics and which for microeconomics? a. How will Ms. Martin’s tips
change when a large manufacturing plant near the restaurant where she works
closes? b. What will happen to spending by consumers when the economy
enters a downturn? c. How will the price of oranges change when a late frost
damages orange groves? d. How will wages at a manufacturing plant change
when its workforce is unionized? e. What will happen to moldavian exports as
the leu becomes less expensive in terms of other currencies? f. What is the
relationship between a nation’s unemployment rate and its inflation rate?
For Macroeconomics:b,e,f
For Microeconomics:a,c,d
6. When one person saves more, that person’s wealth is increased, meaning that
he or she can consume more in the future. But when everyone saves more,
everyone’s income falls, meaning that everyone must consume less today.
Explain this seeming contradiction.
The fotation of the money, its velocity is very important for the states welth as if money are frized
as savings for a long time than from this flotation the amount of money is becoming smoler so than
thing are not bought the demand is deminishing so is the supply , so withdrowing money from the
economy makes the cicle much smaller and in this wai it afects the entire economy as people get a
smaller income and it leeds to recession in the economy

7. a. Whatthree measures of the economy tend to move together during the

business cycle? Which way do they move during an upturn? During a
downturn? b. Who in the economy is hurt during a recession? How?
The three measures that tend to move together are (1) industrial output, called real gross domestic
product, (2) employment, and (3) inflation. All three tend to rise during an upturn and fall during a
downturn. Workers and their families experience a great deal of pain and hardship during
recessions because many people lose their jobs and many who retain their jobs see their wages
suffer. As a result, living standards decline and the number of people living in poverty rises through
unemployment.

8. Why do we consider a business-cycle expansion different from long-run

economic growth? Why do we care about the size of the long-run growth rate of
real GDP relative to the size of the growth rate of the population?
Every country wants to incrise in their long run economic grouth as it means that the economy has
the capacity to incrise the GDP of the country with the full emploiment of the resources sothat
means more utility for consumers, larger profits for domestic firms and grater social welfaire
through out society but the business cycle expension is a graph that actualy shous it all, all that is
happening in an economy by comparing the real GDP over time so it shous the economic situation
in different time wether there is an expension or contraction in the level of GDP till it reaches the
peak or the trough. When we have a long run growth rate of real GDP that means that there is an
incrise in the economy of the country , as more is produced and bought the state has more welth to
spend , more jobs to offer and bigger salaries so in this way it afects the grouth rate of the
population and the quality of life within that state.