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Life has become yet more complicated. Government spending works with a distributed lag. Now when $1 billion is spent today, GDP increases by $1 billion this period and $1.5 billion next period.
a. What happens to the path of GDP if government spending rises enough this period to put GDP back to its potential level this period?
b. Suppose fiscal policy actions are taken to put GDP at its potential level this period. What fiscal policy will be needed to put GDP on target next period?
c. Explain why the government has to be so active in keeping GDP on target in this case.
You run a company, GizmoNet, that produces gizmos. Gizmos hook onto Nintendo Game Boys (hand-held electronic game players), allowing users to access the Internet using wireless communication protocols. Is the training a good investment? Is it general..
A deficit nation in a fixed exchange rate system can improve its balance of payments by increasing. One method for a deficit country to correct the situation under a fixed exchange rate system is to. The saving rate in the United States fell to nearl..
Between 1970 and 1976, average inflation rate of Country X was about 35 percent per year. With that rate of inflation, prices would double about every ________ using the rule of 70.
Patents allow a company to have a monopoly for a period of time. Monopolies result in lower quantity supplied and higher prices to consumers. Do you think companies should be allowed to obtain a patent on a product or not?
In September 2012, the New York City Board of Health approved Mayor Michael Bloomberg's proposal to ban the sale of large sugary drinks in restaurants and other venues in an attempt to reduce obesity and promote more healthful living. How do you thin..
Consider the following short-run production function: q = 5L2 - 1/3L3. Illustrate at what level of L do diminishing marginal returns begin. At what level of L do diminishing returns begin.
Your dental clinic provides 3,000 exams for private pay patients and 1,000 exams for members of a union. Your fixed costs are $50,000 and your incremental cost is $40. Private pay patients have a price elasticity of demand of -3. What do you charge t..
What would the impact of a virus that infected the midwestern corn crop on the price of wheat and the quantity of of corn. Use two graphs one for corn and one for wheat.
If the economy was experiencing a severe recession, which of the following combinations of monetary and fiscal policy actions would be most appropriate?
Tammy Walters wants to know what price home she can afford. Her annual gross income is $40,000. She owes $750 per month on other debts and expects her property taxes and homeowners insurance to cost $250 per month.
As internet banking spreads, velocity begins to increase at a rate of 3 percent per year. What will happen to the rate of inflation? How could the ECB offset the impact on inflation.
Illustrate what can you infer about the expected changew in the exchange rate between the Canadian dollare and the U.S. dollar.
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