Name:_______Keaton Smoot_______________________________

Section: ____________

E-Portfolio Signature Assignment

Salt Lake Community College
Macroeconomics - Econ 2020
Professor: Heather A Schumacker

Please type your answers to the following 5 questions. If you need to hand draw the graphs and then scan them in
you may. Make your answers as detailed as you can show off what you know! When you have completed this
assignment post it to your e-portfolio. Make sure to put your reflection statement on your web site too. A reflection
statement is one in which you relate how this assignment has used information from prior classes or how it may be
useful in the future. (4pts)

What is the formula for PAE (write out the full name)? Circle the largest component and fill in the chart. Under
each put the components and something unique. (19pts)

PAE = ______Consumption_____________ + _____Investments______________

_____Government Spending______________
Components:
Circle the largest category
1.Services
2.Durable
3.Non Durable

+ _____Net Exports______________

Components:

Components:

Components:

1.Business Fixed Investment

2.Residential Construction
3.Inventories
Excludes:

1.Goods
2.Services

1.Imports
2.Exports

1.Financial Assets

1.Interest Payment on the debt

Stocks and Bonds

2.Tranfer Payments

Excludes:

Given the following information, what is the short-run equilibrium output (show your work)
____2610____________ What is the autonomous expenditure _____0.5Y____________ what is the induced
expenditure ___0.5Y______________ where would it cross the Y axis__1305_______________ what is the
slope of PAE __0.5_______________ what is the multiplier ____2_____________ if there is a 10 unit increase
in PAE what will happen to the short run equilibrium (increase or decrease)__increase______________ and by
how much ______20___________ and will it lead to a recessionary gap or an expansionary
gap____expansionary_____________ (9pts)
Ca = 890

MPC = 0.5

IP = 220

G = 300

X-M = 20

What is the problem associated with being at AD2 that makes policy makers concerned? (1pt)
________________Too much inflation_____________________

T = 250

Who does fiscal and monetary policy? What are 2 fiscal policies and 3 monetary policies to correct a situation
where the economy is naturally at AD* but finds itself at AD2, as seen in the graph on the previous page. Briefly
explain how each of these policies would work to correct the situation. (12pts)
Who does fiscal policy: ________Congress (Approved by the President)_______________________
1

___Decrease Government Spending__________________________________

___Government spending is part of the planned aggregate expenditure. Government spending
would decrease overall GDP by putting less money into the economy. Inflation will decrease
when people have less money to spend, because prices must also decrease to meet lower
income levels.
___________________________________________________________________________
____________
___________________________________________________________________________
_______________

__Increase Business Taxes________________________________

__An increase in consumer taxes leads to a decrease in consumer spending because they will
feel less wealthy.
___________________________________________________________________________
_____________
___________________________________________________________________________
_______________

Who does monetary policy: ___Federal Reserve____________________________

1

____Reserve Requirement_________________________________
____The ability to make additional loans. By changing the reserve requirement, the Fed can
directly alter the lending capacity of the banking system.
___________________________________________________________________________
___________

___________________________________________________________________________
_______________
2

___Discount Rate__________________________________
__Interest Rate the Fed charges commercial banks to borrow reserves. Since reserves earn no
interest, banks have an incentive to maintain excess reserves at the minimum federal level.
___________________________________________________________________________
_____________
___________________________________________________________________________
_______________

________Open Market Operations_____________________________

_____Buying and selling bonds. It is Primary tool for affecting the supply of bank reserves
and supply of money. Open market operations are most important. The decision is flexible.
___________________________________________________________________________
__________
___________________________________________________________________________
_______________

Use the excel sheets provided to complete this problem. Scenario 1: If the initial deposit into a bank is $5,000
and the reserve requirement is 10% use formulas to fill in the chart all the way to completion (where there will
be 0 for new deposits). Use formulas and cell references whenever possible. Fix the cell references for the
reserve requirement when entering your formulas on the first line such that you can drag your information down
the rows. Fixing a cell reference is done by putting dollar signs in front of the cell row and column references
ex. $B$3 this will mean that no matter where you copy that cell to it will always refer to cell B3. For scenario
2, change the reserve requirement to 40%.

Create a third page of the excel spreadsheet and label it GDP. Enter in the data given below for 2012 U.S.
expenditure numbers and then create a pie chart with percentages. (Under Insert then click pie. When the graph
comes up click Chart Tools, Design, Quick Layout and select a pie chart with percentages. Create your own
personal
color selections for each piece of the pie and
Consumption Expenditures
10362.3
put a
background color on the percentages.)
Investment Expenditures
1763.8
Make sure to
title your chart: GDP 2012 U.S.
Government Expenditures
2974.7
Net Exports
-499.4

Begin in equilibrium in each of the following graphs; draw the effects from question 2 above as they would
apply in each graph below. Next draw the effects of an anti-inflationary policy taken by the fed to correct the
result from question 2 - use all three graphs (Money Supply and Money Demand, AD/AS, and PAE). Explain
what is happening in each graph and overall in the economy as the due to the anti-inflationary policy. (20 pts)

Money Supply and Money

Demand Graph
Nominal
Interest
Rate and
Aggregate
Demand
Aggregate Supply

Money Supply Curve (MS)

PL

Real GDP

i
MS
1

AS

Money Demand
(MD)

i
Q
M

AD1

Q
M
PAE

PAE

PAE = Y
45

PAE
PAE

Reflection: When I grow up and become a big kid one day, I will need to understand these economic
concepts. It is hard to apply it now because I am a poor college student and the only thing that I am
worried about right now is to make ends meet! Pay the bills and make it through. I am not going to lie, it
is pretty hard to apply right now, because this is some pretty advanced stuff. One thing that did happen is
that I was stretched this semester with every assignment. It was not just this assignment but it was just

AD

about every assignment that I had to work really hard at. Economics is a discipline that is very valuable for
adults in dealing with finances. Some of this stuff is pretty advanced, but a lot of it is applicable.