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General Instructions – PLEASE READ THEM CAREFULLY
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The Assignment must be submitted on Blackboard (WORD format only) via
allocated folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be
reduced for poor presentation. This includes filling your information on the cover
page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students
or other resources without proper referencing will result in ZERO marks. No
exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced)
font. No pictures containing text will be accepted and will be considered
plagiarism).
Submissions without this cover page will NOT be accepted.
Chapter 13, 14 & 15: Critical Thinking: Financial System: Saving and Investment &
Unemployment and Its Natural Rate: (10 Points)
In the second assignment for the Macroeconomics course, the students are required to choose a specific
area from the subject and answer the questions given, upon successful completion of the assignment; the
student should be able to achieve the following learning outcomes:
Learning Outcomes:
1. Describe how to evaluate macroeconomic conditions such as unemployment, inflation, and
growth. [CLO 1.2]
2. Recognize the fundamental determinant’s of a nation’s long-run economic growth. [CLO 1.3]
Reference Source:
Textbook: – Mankiw, N. Gregory. Principles of Macroeconomics, 6th ed. Mason, OH: South-Western
Cengage Learning, 2011. ISBN: 9780538453066 (hard copy); ISBN: 9781115468523 (eBook)
Q.1. Critical Thinking: Financial System: Saving and Investment: Chapter 13: (4 Points)
Suppose the government borrows $20 billion more next year than this year.
a. Use a supply-and-demand diagram to analyze this policy. Does the interest rate rise or fall?
b. What happens to investment, private saving, public saving, and national saving? Compare the
size of the changes to the $20 billion of extra government borrowing.
c. How does the elasticity of supply of loanable funds affect the size of these changes?
d. How does the elasticity of demand for loanable funds affect the size of these changes?
e. Suppose households believe that greater government borrowing today implies higher taxes to
pay off the government debt in the future. What does this belief do to private saving and the
supply of loanable funds today? Does it increase or decrease the affects you discussed in parts (a)
and (b)?
Important Note: – Support your submission with course material concepts, principles, and
theories from the textbook and at least two scholarly, peer-reviewed journal articles.
Q.2. Critical Thinking: Financial System: The Basic Tools of Finance: Chapter 14: (3 Points)
When company executives buy and sell stock based on private information they obtain as part of
their jobs, they are engaged in insider trading.
a. Give an example of inside information that might be useful for buying or selling stock.
b. Those who trade stocks based on inside information usually earn very high rates of return.
Does this fact violate the efficient markets hypothesis?
c. Insider trading is illegal. Why do you suppose that is?
Important Note: – Support your submission with course material concepts, principles, and
theories from the textbook and at least two scholarly, peer-reviewed journal articles.
Q.3. Problems and Applications: Unemployment: Chapter 15: (3 Points)
The Bureau of Labor Statistics announced that in April 2010, of all adult Americans,
139,455,000 were employed, 15,260,000 were unemployed, and 82,614,000 were not in the labor
force. Use this information to calculate:
a. The Adult Population
b. The Labor Force
c. The Labor-Force Participation Rate
d. The Unemployment Rate
Important Note: – Support your submission with course material concepts, principles, and
theories from the textbook and at least two scholarly, peer-reviewed journal articles.
Answer:

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