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With a constant world interest rate, full employment, and an initial trade surplus of zero, a tax cut in a small open economy will result in
Given the above aggregate production function, write an equation for the marginal product of labor, MPL, as a function of A, K and L.
Answer the following questions based upon the following production function for the aggregate economy:
I. What was Krugman's problem with economic policy before the recession? II. What type of economic policy did Krugman argue for? Why use this policy?
Calculate: (a) the equilibrium level of output for this economy; (b) the amount the government collects in net tax revenue when the economy is in equilibrium; (c) the government budget deficit or surp
Assume we are using a Classical Model of the economy. Suppose the government increases its total spending for the year by $5 billion. What will happen to:
Assume both demand and supply curves are linear. Graph the market situation. Be sure you label the demand curve, supply curve and both axis.
The FED sells $2000 worth of T-bills on open market operations. Does the money supply increase or decrease? What will be the total change in the money supply if the required reserve ratio is 20% of
a) Are there any non-feasible production points? If so, what are they and why are they non-feasible? b) Given the current PPF (the curve joining points A and B) would Wisconsin choose to produce
a) What is the equilibrium level of the money stock (M) and the interest rate (r) in the money market? b) What is the equilibrium level of income (Y) in the output market?
Now suppose that, in order to finance its expenditures, the government decides to set T=G=15. (This would be an example of a balanced budget situation.) By how much does GDP go down? What is t
Suppose you are analyzing the state of your country's economy using a Classical Model. You know what the labor market looks like and you also know your country=s aggregate production function.
Assume that the demand and supply equations are linear. (a) Fill in the missing information in the table above. (b) Find the demand and supply equations for this market. (c) Find the market equilibriu
Answer the following questions using the figure given below. a. Which points are feasible and obtainable for the economy represented in the above graph?_______________ b. Which points are infeasible a
If an economy is in a long-run equilibrium and an unexpected increase in aggregate demand occurs, there will be a
The demand for money curve has a __________ slope and the supply of money curve has a __________ slope.
If everything else about these two economies is the same (except for their MPCs), then which one will experiences a larger change in GDP as a consequence of the tax cut? How much larger is the
Which of the following is most likely to contribute to the growth of a poor country? a. Rapid population growth. b. An increase in money supply. c. Secure property rights and political stability. d. E
a. Calculate the nominal GDP for this economy for the given years. b. Calculate the rate of change on the nominal GDP from 1999 to 2000 and from 2000 to 2001.
Suppose that the government decides to impose a tax of $1.50 per banana on bananas. Will this tax result in a shift in or a movement along the supply curve? Will this tax result in a shift in or a m
Suppose that the base year is 1989. The government announces that the growth rate of Real GDP was 20% from 1989 to 1990. Assume the population in Tech-Land is 10 in 1989 and in 1990.&nbs
The three main goals of government macroeconomic policy are: a. Price stability, low unemployment, and high growth rates of output b. Zero inflation, zero unemployment, and high standards of living. c
All of the following would tend to increase a nation’s production possibilities EXCEPT: a) The culture becomes more accepting of women who work. b) A new hybrid for wheat is discovered. c) A gov
The government’s demand for funds in the country of Fantasyland in 2003 is $ 1.5M. This is compatible with:
Holding everything else constant and assuming taxes are zero, an increase in the marginal propensity to consume