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The quantity theory states that the impact of money on nominal GDP can be determined without details about the aggregate demand curve, so long as the velocity of money is predictable.
Suppose the money supply is currently $500 billion and theFed wishes to increase it by $100 billion. If it decided to change the money supply by changing the required reserve ratio, what change shou
(a) The government announces that the tax rate on laborincome will rise in the future. (b) An earthquake reduces the capital stock by10%. (c) A stock market boom raises people's wealth.
Suppose now thatbefore making this product, the firm has to pay fixed costs of research anddevelopment equal to $3,000,000. How large does N need to be before theprofit-maximizing firm chooses to pa
It is possible for U.S. federal budget deficits to crowd out investment spending in other countries How could German or British investment be hurt by large U.S. budget deficits
Siberia can be considered as a closed economy. Recentdata about its population movements indicate that the region suffered from asevere loss in its working age population from 1995 to 2005.
After reading the newspaper Homer Simpson embarks on thefollowing get-rich-quick scheme: he borrows money from aSpringfield bank at 8% and deposits it in a Shelbyville bank at12%, expecting to make
(a) Find the price and quantity that maximizes the company's profit. (b) Find the price and quantity that would maximize socialwelfare/total surplus. (c) Calculate the dead weight loss from monopoly.
d Iris have Legos andcrayons. Zaley has 5 Legos and 5 crayons, Iris has 2 Legos and 8 crayons. Zaley's utility function for Legos andcrayons is uz(lz, cz) = lz · cz where lz and cz represent q
Identify on your diagram the set of all Pareto efficient allocations. (c) Suppose each good has a market price of 1. Illustrate on yourdiagram the bundles demanded by each consumer. Is this a compet
What are the prime rate, the discount rate, and the federal funds rate Who controls these rates What would you expectto happen in the general economy if these rates are all increased or Decreased
what must the Bank of Canada have set the money supply at (b) Taking that level of the money supply as fixed, suppose nowthat people expect the Bank of Canada to raise the money supply by11% over th
Due to its remoteness, Siberia can be considered as a closedeconomy. Recent data about its popula- tion movements indicate thatthe region suffered from a severe loss in its working agepopulation fro
Suppose that the economy is currentlyat potential output. Also suppose that you are an economicpolicy maker and that a college economics student asks youto rank, if possible, your most preferred to
(1)Compute the optimal prices, and the Lerner index and inverseelasticity of demand for each good. (2)Now suppose the goods are produced by two firms that chooseprices simultaneously. Compute the Nash
According to the spending allocation model, adecrease in government spending results in, among other things, anincrease in investment in the long run. Suppose the capitalstock is $1 trillion and a f
What will the multiplier be when the MPS is 0.4, 0.6, 1, ½ and 0 How much of a change in theeconomy will result if businesses increase their level of investment by $8 Billion and the MPC in th
Suppose you may choose between two machines for production atyour store. Both machines have a useful cycle of 10 years. MachineA cost $10,000, leaves an annual (EOY) income of $2,500, machine Ahas a
Since, income elasticity of luxurious goods is positive i.e. as income increases;demand also increases. So, with the increase in income, demand ofluxurious goods from abroad will increase because su
Suppose that, for a particulra type of firm, the MPL isnot diminishing, but it's also not increasing. What does the MCcurve for this firm look like Why might it make sense to think ofthe firm's capi
a) sketch the graph, clearly labeling all parts b) what is the equilibrium price in the absence of trade c) what will be the equilibrium price with trade d) if there is a trade barrier indicated by th
what allows companies to distribute the same prescirption drug for two different prices Why dont competitiors under cut their price in the Western countries (i.e. United States)
Assume market demand increases and that the new demand curve is nowQd = 50 - P. Further assume the government provides to eachfirm, a subsidy of $40 per unit of output produced. Thus the supply curv
a. Based on the two-period model covered in class, write down thefirms budget constraint in period t. b. Derive the firm's demand for labor in period t as a function ofwages, interest rates and a.
Assume that when the price of good X is $10, each, I buy none. When the price is $9 each, I buy 1 per period. When the price is $8 each, I buy 2 per period. When the price is $7 each, I buy 3 per pe