Department of Economics and Finance

Macroeconomics (ECON 102), Summer 2020

Assignment 1

(Due Tuesday, July 21, 2020)

Refer to the following video from minute 14 to 31 (How the Economic Machine Works by Ray Dalio) to answer the following questions:

https://www.youtube.com/watch?v=PHe0bXAIuk0

1- Why interest rate works in recession but does not work in deleveraging?

2- When the central banks print money, what can they buy? How about the central governments?

3- What is a beautiful deleveraging?

4- What are the three rules of thumb that you would take away from the video?