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Assume an economy that consists of consumers, government, business investors and an international sector. we will express this economy this way C+I+G+X=GDP Assume that the MPS is .3 How much can we expect the economy to expand if goverment increases its spending by $100B and at the same time,Congress imposes tax increases of the same amount ($100B) to pay to the increased spending and that tax increase causes C to fall by $70B?
There are two sectors of the construction industry that currently pay their employees the market-clearing wage. The demand for labor in each sector is w = 18 – Ed , where Ed = the number (in thousands) of workers. What is the wage rate in both sector..
Discuss if government employees were to be given a limited right to strike, which occupations should be prohibited from striking, and under what conditions should the prohibition be enforced?
Define Monetary Policy. Describe the impact that Monetary Policy has on our economy. Name the three major tools of Monetary Policy and describe how each one would be used to lower the money supply.
Analysts have estimated the present values of the following effects over the expected useful life of the pool: PV (million dollars) State grant: 2.2 Construction and maintenance costs: 12.5 Personnel costs: 8.2 Revenue from county residents: 8.6 Reve..
Invisible hand of market would optimally allocate exhaustible resources and prevent shortages because market prices of a resource such as oil reflect both its current value and its future value. Why might Hotel ling be right.
The government modifies the consumption tax somewhat so that the first $20k of consumption in each period is tax free. Now graph the budget constraint.
Suppose that the Mexican Peso is trading at 10 pesos per dollar, the interest rate in the US is 5% and the interest rate in Mexico is 4%. What must happen to the exchange rate in order for the interest rate parity condition to hold?
What does a contractionary gap imply about the actual rate of unemployment relative to the natural rate? What does it imply about the actual price level relative to the expected price level? What must happen to real and nominal wages in order to clos..
q1. p320-.04q with quantity q measured in thousands of barrels per day and price p measured in dollars per barrel. the
Define three types of elasticity of demand. Indicate how you would use information from recent research paid by your company that the own price elasticity of your product is -1.2 and not -0.8 as previously thought
q. desired consumption is 100 0.8y - 500r - 0.5g and desired investment is 100 - 500r. real money demand is p y -
Can we say confidently whether good X is a normal good or an inferior good.
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