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Suppose the economy is initially in long-run equilibrium. Due to decline in house prices, suppose that consumers reduce their consumption spending. (a) Explain how the decline in consumer spending affects the AD curve. (b) If the fed does not change its monetary policy rule, how will the fed react to the decline in consumer spending? Use an AD/AS diagram to illustrate and explain your answer. (c) Now, in addition to the decline in consumer spending, suppose that the economy experiences an adverse inflation shock. (i) Explain how the adverse inflation shock affects the AS curve. (ii) Discuss, using AD-AS diagram, what choices the Fed now must make regarding monetary policy. (Hint: Think about whether or not it should tighten monetary policy).
Consider a monopolist informal moneylender and competitive formal creditors who lend to farmers. illustrate what are the interest rates.
Advise the firm on how to plan production in the coming month if average income is set to increase by 12%.
Explain why government regulation is or is not needed, citing the major reasons for government involvement in a market economy. Provide support for your explanation.
Use an indifference curve-budget line analysis to depict the situations, prior to the ban on smoking, of a student who smoked on campus, and of a student who did not smoke.
If the mutual fund will average 9% annual return over the course of your career, explain how much can you expect at retirement.
To raise the incomes of the worlds severely poor population to the official threshold of US poverty.
An agency is having problems with personal phone calls made during working hours.
What does the vertical distance between the horizontal axis and any point on a pure competitors demand curve measure.
To determine which of the output levels represents a macroeconomic equilibrium.
Smith has been trying to sell his house for 6 months although so far there are no purchasers. Draw the market for Smith's house.
Explain how much will your firm's total revenues (revenues from both products) change if you increase the price of good X by 1 percent.
Show why the firm should not be charged a per-unit tax on the firms output to compensate for the pollution it discharged into a major river. Devise a game plan for responding to the questions that will be raised in the joint session of the subcomm..
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