<p>I feel like theres a ton of these posts out here but they are all over the place and some people are posting in some and some are just dormant.</p>
<p>So I wanted to try and make a more official Macro post, just like the other Micro one.</p>
<p>The questions are posted here:</p>
<p>Discussions about the FRQs?</p>
<p>The third question caught me by surprise. I should have studied the effects of the Fed buying/selling bonds and securities from BANKS a bit more. I mainly studied the effects of them buying from the public. The end result is the same, but there is a few differences in what the immediate results on the balance sheet are.</p>
<p>I was expecting a question on the recession, since that reflects the recent economic situation, and I’m positive I got a perfect score on that.</p>
<p>The second question I did pretty well on, but it was a horrible question. Very few people in my class correctly shifted the supply curve to the right in the first part of the question. I only remembered it from a free response question I had done by myself in the past. </p>
<p>Overall, the test went pretty well. The FRQs were somewhat tricky. Hopefully, the points off from the last question shouldn’t hurt me that much.</p>
<p>dream4yale, why would supply shift right in the first question?</p>
<p>more investment from European union=more investors trying to purchase bonds, etc. from Japanese companies=Demand shifts right. Right?</p>
<p>If they invest money, then they’re putting their money into the economy, so supply shifts right.</p>
<p>I reasoned that supply would shift right because if investors invest in capital, instead of stocks/bonds, per say, that money would become income to someone else who would save a portion of it. I also thought what if these investors just put their money in Japan’s banks to take advantage of their interest rates. </p>
<p>Finally, I also thought that if they did invest in stocks and bonds, increasing their prices, some people in Japan would sell their stocks/bonds to take advantage of the higher prices at the time, increasing their disposable income, which they would then save a portion of.</p>
<p>I can still see your line of reasoning, but I distinctly remember the supply of loanable funds shifting in a situation similar to this.</p>
<p>Isn’t Form B the makeup exam? Because those questions are posted also.</p>
<p>Form B is the international form, not the make-up. So those would be the international questions. They usually never post the questions for makeup…also the makeup test hasn’t happened yet.</p>
<p>Who is 100% sure about number two and whether the supply moves to the right or demand moves to the right?</p>
<p>What was the reserve ratio?</p>
<p>And for 2, couldn’t the demand also shift. If foreigners want to invest in Japan’s goods more, wouldn’t Japan have higher interest rates?</p>
<p>Also, what will happen to the price of bonds in the marketplace?</p>
<p>@MyPencilCase
I think the reserve ratio was 20%, because $2000 in required reserves/$10000 in demand deposits = 20%.</p>
<p>I really honestly thought demand shifted, because demand for loanable funds = investment, so…</p>
<p>And that would mean price of bonds went up. But everyone’s been saying that supply of loanable funds increases…which means price of bonds goes down…
SOOOOO… derp. >:[</p>
<p>An increased amount of investment from the EU = investment demand curve shifts right = interest rate goes up = unemployment falls due to businesses investing more in capital</p>
<p>I’m really not sure about the very last part, but how are the first three parts wrong?</p>
<p>It’s the market for loanable funds. By investing money, investors aren’t borrowing money; they’re investing their own money, thus contributing to the supply of loanable funds. They’re not demanding any funds.</p>
<p>does the NRU change? i wasnt sure…</p>
<p>and yes i believe for loanable funds market supply shifts to the right.</p>
<p>ah that makes perfect sense apn00b. Oh well, hopefully that conclusion will only be like 1 or 2 points, and they will give you points for the next subpoint so long as it is consistent with your answer for the first one.</p>
<p>in the third question, does anything happen in the right side of the bank sheet?</p>
<p>Nothing happens I believe.</p>
<p>I concur. And I said that immediately afterwards, excess reserves increased by 5000, as they had already met their reserve requirement.</p>
<p>So demand deposits don’t change?</p>
<p>4, which was along what I was expecting. I am content.</p>