Macroeconomics

Part A

1. Why is the money multiplier in the United States smaller than the inverse of the required reserve ratio? Provide one (1) reason.

2. Explain why depositing cash into a checking account does not change the money supply. Provide one (1) supporting fact.

3. Explain why the money supply does not change when one individual writes a check to another. Provide one (1) supporting fact.

Part B

1. Describe one (1) reason why the flexibility of wages and prices tend to favor the Keynesian economic view in the short run and one (1) reason why the flexibility of wages and prices tend to favor the classical economic view in the long run.

2. Refer the figure below and explain what happens in each graph (A, B, and C) when an economy is moving from a recession (point a) back to full employment.

Grading Rubric

Please refer to the rubric below for the grading criteria for this assignment.

CATEGORYExemplarySatisfactoryUnsatisfactoryUnacceptable

10 points 8 points 5 points 2 points

Student provides a clear,

logical description of at least

1 reason why the money

multiplier in the United

States smaller than the

inverse of the required

reserve ratio.

Student provides a mostly

clear, logical description of

at least 1 reason why the

money multiplier in the

United States smaller than

the inverse of the required

reserve ratio.

Student provides a weak or

unclear description of at

least 1 reason why the

money multiplier in the

United States smaller than

the inverse of the required

reserve ratio.

Student provides a poor

description of at least 1

reason why the money

multiplier in the United

States smaller than the

inverse of the required

reserve ratio.

5 points 4 points 3 points 1 points

Student provides a clear,

logical description of at least

1 reason why depositing cash

into a checking account does

not change the money

supply.

Student provides a mostly

clear, logical description of

at least 1 reason why

depositing cash into a

checking account does not

change the money supply.

Student provides a weak or

unclear description of at

least 1 reason why

depositing cash into a

checking account does not

change the money supply.

Student provides a poor

description of at least 1

reason why depositing

cash into a checking

account does not change

the money supply.

5 points 4 points 3 points 1 points

Student provides a clear,

logical description of at least

1 reason why the money

supply does not change

when one individual writes a

check to another.

Student provides a mostly

clear, logical description of

at least 1 reason why the

money supply does not

change when one individual

writes a check to another.

Student provides a weak or

unclear description of at

least 1 reason why the

money supply does not

change when one individual

writes a check to another.

Student provides a poor

description of at least 1

reason why the money

supply does not change

when one individual

writes a check to another.

15 points 12 points 8 points 5 points

Student provides a clear,

logical description of at least

1 reason why the flexibility

of wages and prices tend to

favor the Keynesian

economic view in the short

run.

Student provides a mostly

clear, logical description of

at least 1 reason why the

flexibility of wages and

prices tend to favor the

Keynesian economic view in

the short run.

Student provides a weak or

unclear description of at

least 1 reason why the

flexibility of wages and

prices tend to favor the

Keynesian economic view

in the short run.

Student provides a poor

description of at least 1

reason why the flexibility

of wages and prices tend

to favor the Keynesian

economic view in the short

run.

Part A: Money

multiplier (10

points)

Part A: Depositing

cash (5 points)

Part A: Writing a

check (5 points)

Part B: Flexibility of

wages and prices -

short run (15 points)

15 points 12 points 8 points 5 points

Student provides a clear,

logical description of at least

1 reason why the flexibility

of wages and prices tend to

favor the classical economic

view in the long run.

Student provides a mostly

clear, logical description of

at least 1 reason why the

flexibility of wages and

prices tend to favor the

classical economic view in

the long run.

Student provides a weak or

unclear description of at

least 1 reason why the

flexibility of wages and

prices tend to favor the

classical economic view in

the long run.

Student provides a poor

description of at least 1

reason why the flexibility

of wages and prices tend

to favor the classical

economic view in the long

run.

20 points 15 points 10 points 5 points

Student provides a clear,

logical description of what

happens in each of the 3

graphs when an economy is

moving from a recession

(point a) back to full

employment.

Student provides a mostly

clear, logical description of

what happens in 2-3 of the

graphs when an economy is

moving from a recession

(point a) back to full

employment.

Student provides a weak or

unclear description of what

happens in 1-2 of the graphs

when an economy is

moving from a recession

(point a) back to full

employment.

Student provides a poor

description of what

happens in 1-2 of the

graphs when an economy

is moving from a recession

(point a) back to full

employment.

20 points 15 points 10 points 5 points

Student makes no errors in

grammar or spelling that

distract the reader from the

content.

Student makes 1-2 errors in

grammar or spelling that

distract the reader from the

content.

Student makes 3-4 errors in

grammar or spelling that

distract the reader from the

content.

Student makes more than

4 errors in grammar or

spelling that distract the

reader from the content.

10 points 8 points 5 points 2 points

The paper is written in

proper format. All sources

used for quotes and facts are

credible and cited correctly.

The paper is written in

proper format with only 1-2

errors. All sources used for

quotes and facts are credible

and most are cited correctly.

The paper is written in

proper format with only 3-5

errors. Most sources used

for quotes and facts are

credible and cited correctly.

The paper is not written in

proper format. Many

sources used for quotes

and facts are less than

credible (suspect) and/or

are not cited correctly.

Format (10 Points)

Mechanics (20

Points)

Part B: Flexibility of

wages and prices -

long run (15 points)

Part B: Graphs (20

points)