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Suppose a new technology is developed that increases investment demand in both a closed economy and in a small open economy that are in other ways identical. Holding other factors constant, will the quantity of investment spending increase more in the closed economy or in the small open economy? Explain. Assume prices are flexible and that factors of production are fully employed in both economies. Assume there is perfect capital mobility for the small open economy.
Given an increase in spending of $1,000, and a Marginal Propensity to Consume of 80%, what would be the total increase in the GDP what would the Multiplier be?
Illustrate the infant industry argument for putting up barriers to imports. What are its merits and weaknesses.
As an worker of the World Bank you have been asked to research requires of a country with a particular economic concern.
Given table of data comprising real GDP and its components over a number of years, compute compound annual percentage changes in real GDP (economic growth) and compute the shares in real GDP of consumption.
Your company is considering a price reduction on a product which currently sells for the price of $5.00.The price elasticity for the product is roughly equal to -2.3 over the range being considered for the price change.
Use concepts that you have learned throughout the semester, such as consumer and producer surplus, scarcity, and how companies decide where to price products and how much to produce, and how we as consumers decide at what price we will purchase a ..
Create a scatterplot with age on the horizontal axis and the log of price on the vertical axis. Do older wines tend to sell for more than younger wines? Does an older wine always sell for more than a younger wine?
Explain how can the abolition of cash fight inflation and reduce unemployment.
In the Keynesian, Classical, as well as Solow model, Elucidate the impact of an increase in production technology
Describe a moral hazard problem your company is facing. What is the source of the asymmetric information? Suppose that every driver faces a 1% probability of an automobile accident every year. An accident will, on average, cost each driver $10,00..
With a U.S. marginal propensity to consume, assumed at 1/2, what will happen to the following with the neoclassical model of national income if the Bush Tax Cuts expired
Use the market-clearing Real Business Cycle model developed in chapters 9-11, to analyze the effects of expectations of higher future government spending and (lump-sum) taxes. Under what conditions can this explain a slow recovery?
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