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Suppose that the Fed's inflation target is 2%, potential output growth is 3.5%, and velocity is a function of how much the interest rate differs from 5%: %^V= 0.5 X (i-5). Suppose that a model of the economy suggests that the real interest rate is determined by the equation r= 8.35-%^Y where Y is the level of output, so %^Y is the growth rate of output. Suppose that people expect the Fed to hit its inflation target. In the short run, if output growth is just 2 percent for two years and the equation determining the real interest rate changes to r=4.5-%^Y, what money growth rate should the Fed aim for to hit its inflation target in that period?
A company analyse it has the following short-run demand. What initial price should the firm charge.
Suppose you are reviewing an isocost graph. The axis on the graph shows capital units on the vertical axis, and labor units on the horizontal axis.
When you buy a set of speakers, Best Buy asks if you would like to purchase insurance for your speakers. Assume that paying for new speakers for customers who listen to music at a reasonable level (thus minimizing damage) costs, on average, $150, ..
Jon Mitchell runs a small, very stable newspaper company in northern Georgia. The paper has been in business for 23 years. The total value of the firm's stock is $2 million, which Jon owns outright. This year the firm earned a total of $500,000
As we all know, at current it is illegal for parents who want to adopt a child to pay the birth mother for, or to offer to pay for, the babies they adopt.
Since the end of World War II, some countries have achieved great strides in a variety of development indicators, whilst others have stagnated, and still others have had mixed experiences.
Calculate what level of output this monopolistic competitor should produce if he/she wishes to maximize profits.
Assume that Microsoft is considering a merger. The possible merger faces some threats and that the industry desides on self-expansion as an alternative strategy, describe the additional complexities that would arise under this new scenario of expa..
If a 20 percent lowring in the price of long distance phone calls leads to a 35% increase in the quantity of calls demanded, we can conclude that the demand for phone calls is:
Macroeconomic studies would be more interested in the trend in overweight and obesity in the U.S. and other OECD countries rather than the percent of public spending on health care.
Assume that, from an initial consumer equilibrium position, price of good X falls while the price of good Y remains the same.
(Elasticity and Total Revenue) Explain the relationship between the price elasticity of demand and total revenue. (Determinants of Price Elasticity) Would the price elasticity of demand for electricity be more elastic over a shorter or a longer per..
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