INSTRUCTIONS:  PLEASE ANSWER QUESTIONS 2, 3, AND 4 ON THE PROBLEM SET ITSELF.  PLEASE ANSWER ALL PARTS OF QUESTION 1 ON A SEPERATE SHEET(S) OF PAPER.  YOU MUST TYPE YOUR ANSWERS TO QUESTION 1 AND THEN STAPLE YOUR WORK FROM QUESTION ONE TO THIS SHEET.  FAILURE TO FOLLOW DIRECTIONS WILL RESULT IN THE LOSS OF 5 POINTS PER INFRACTION.

1.  In order to answer question one you will need to refer to the articles on the class website.  Your grade will be based on the completeness and quality of your answer.
            A.  Explain what is meant by the "new economy" refered to in articles New Economy and New Economy 2.  Be sure to fully explain why some consider the economy to be "new".  If the economy has changed, what effect could that have on the future growth of the economy and future economic policy.

            B.  Give your opinion on the policy recommendations laid out in the article Gore/Bush Policy Debate.  Addressing specific policies mentioned in the article, do you feel that Gore's policy makes sense?  Carefully explain why or why not.  Throughout most of the article, Gore critizies Bush's policy.  Do you believe that Gore is correct in his criticism?  Why or why not. 
 

2.  This question is based upon the profile of Alan Greenspan located on the class website. After reading the profile, please answer the following questions.
            A.  What title does Alan Greenspan currently hold?

            B.  How old is Greenspan (now)?

            C.  What was his annual salary?

            D.  Greenspan was initially nominated as chairman of the Council of Economic Advisors by what president?

            E.  Who was president when he was confirmed as chairman of the Council of Economic Advisors?

            F.  Under Reagan, what commission did Greenspan initially chair?

            G.  What is his current wife’s name and job?
 

3.  If a bank has a require reserve ratio of 20% and receives $500 in new demand deposits:
            A.  How much of these new deposits are required reserves?
 
 

            B.  What is the monetary multiplier?
 
 

            C.  How much could the money supply be expanded?
 
 
 
 
 

4. Using the information provided fill in the chart below. Suppose the typical coupon bond in the bond market has an annual interest payment of $300. What generalization can be gained from the chart?  SHOW ALL WORK TO RECEIVE CREDIT.
 

BOND PRICE	INTEREST RATE YIELD (%)
$6000
	6%
$12000

 
 

5. CURRENT EVENTS BONUS SECTION: I will ask one current event question right before I collect the problem sets. In order to answer the question you must be present. After asking the question I will collect the problem sets and no further bonus questions will be asked. The question will have to do with topics we have been discussing in class.

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