ECO 360 Intermediate Macroeconomics Assignment

January 14, 2021

2020 Fall
Deadline: Saturday May 16, 11:59 EST
Instruction:
• There are 3 questions.
• Read the requirement of each question carefully. You will lose
credit if you failed to follow the requirements.
• Write your answers in one file in a well-organized way. The format
should be 12-point Times New Roman font, single-line spacing,
normal margins and justified text alignment.
• Please submit a Word or PDF file on Blackboard before the
deadline. DO NOT write your answers on paper and submit a
picture/photo. That will NOT be accepted! Late submission will
NOT be accepted either!
• Do not commit plagiarism!

ECO 360 Intermediate Macroeconomics Assignment Questions
1. The pandemic outbreak hit the US economy since March. Find
how the major economic variables changed in the first quarter.
These variables may include unemployment rate, real GDP per
capita, inflation, real interest rate, money velocity, stock price
index, and other variables that you think can reflect financial
markets and macroeconomic conditions.
Hint: You can use the FRED economic data from Fed St. Louis.
Notice that these data series may have different frequencies. If it’s
quarterly or monthly data, show the change in a table. If it’s
weekly or daily, show with a graph. If there are many, you should
always use the one with higher frequency. In addition, you should
also describe with brief words about what are the changes to these
variables.
2. Summarize the policy responses of the Fed since March 3rd until
the end of April. What are the policy changes in conventional
monetary policy (e.g. federal funds rate, discount rate, interest
rates on reserves, etc.), and in unconventional monetary policy
(e.g. liquidity facilities, paycheck protection programs, etc.)?
Hint: You can find the information on the Federal Reserves’
website in the press release. To make it more readable, organize
your answer with bullets points and concise words. You should
also mention the date when the policy was announced. Copy and
paste will result in zero credit for this question!!!
3. For this part, you should use the theories and models we studied in
this course to analyze the current crisis.
a. What do you think are the reasons of the change in money
velocity based on your answer in question 1? Specify the
theory you use that supports your argument.
b. What is the type of the pandemic shock? Use the AD-AS
framework to show what is the impact on short-run and longrun
equilibria. Is it consistent with what you find from data in
question 1?
c. What are the aims of the Fed’s monetary policy responses as
you summarized in question 2? How do these responses help
smooth the fluctuations in the short run?
d. Given the current level of the federal funds rate, what type of
monetary policy (conventional or unconventional) do you
expect the Fed to use if the recession gets deeper in the
future? Why?
Hint: You should explain using the AD-AS model and
demonstrate with graphs and brief words for part b to d.