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Inflation, investment, supply curves
Explain why a decrease in aggregate demand results in a lower level of employment, given a fixed aggregate supply.
Distinguish between two sources of inflation. Explain why steady inflation is likely to be less harmful to an economy than a situation which inflation rates vary alot.
"A rise in planned investment spending in an economy will lead to a rise in consumer spending." use the concept of the multiplier to verify this statement.
In constructing the short run aggregate supply curve, what is meant by the term "short-run"? How does this concept differ from the long run and what is the effect on industry of the difference in terms of planning? Explain the role of labor contracts on movement along the SRAS curve
Suppose we have a competitive market for a good with domestic demand and supply given by:
Illustrate what effect a contractionary fiscal policy have on the price level and real GDP.
Life insurance companies require applicants to submit to a physical examination as proof of insurability prior to issuing standard life insurance policies.
Aztec depends heavily on advertising to sell its products. Management at Aztec is allowed to spend $2 million monthly on advertising-What is Aztec's elasticity of demand for advertising?
Illustrate what effort does the principal want to induce when effort is not observable. Illustrate what is the optimal contract for the principal.
What is its sustainable growth rate. Illustrate what must its profit margin be in order to achieve its sustainable growth rate.
A firm uses two inputs, unskilled labor (L) and capital (K) to produce its product. The wage rate for one unit of labor is $5, while units of capital cost $20.
Determine the profit-maximizing prices both firms will charge. In addition, calculate the price-cost margin for each firm and indicate which has more pricing power and why.
The following quotations are from an article in the Financial Times on November 9, 2007:
Is your employee affected by increases in the minimum salary. In what way is your employer affected by minimum wage increases.
Explain how much utility will the marginal dollar yield.
Throughout this course we have discussed the 'agency problem' - i.e., when the interests of owners and managers are not properly aligned.
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