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In addition to depending on disposable income, suppose household consumption were also a function of the interest rate. In particular, assume that households consume more (i.e., save less) when the interest rate falls. Assume prices are fixed in the short run.
A) Explain how this situation would influence the shape of the IS and/or LM curves relative to the case in which consumption is not a function of the interest rate.
B) Now use IS and LM curves to illustrate how this situation would influence the short-run effectiveness of monetary policy.
C) What, if anything, would this modification do to the shape of the aggregate demand curve?
Suppose that Wal-World and Tarbo are independently deciding whether to implement a new bar code technology. It is less costly for their suppliers to use one system and the following payoff matrix shows the profits per year for each company.
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Time Magazine and Newsweek are two competing news magazines. Suppose that each company charges the same $5.00 price for their magazines. What is the Nash equilibrium for this sequential game?
Discuss how the requirement of a goods and the availability of substitutions impact price elasticity.
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Illustrate why is it difficult for the Fed to decide whether or not to change its interest rate target in the federal funds market.
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Try to comprise a discussion of elasticity and the demand curve as well as type of market. Make sure you also include some history etc.
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You are looking to install a new solar energy system for your house (for heating, air conditioning, and hot water). The cost of the system is $14,000 and the annual savings in electricity for this system today is $2500. This system has a lifespan ..
The North Carolina Association of Professional Cat Groomers has asked the state legislature to require that anyone who offers cat grooming services in the state must have a license. Under the Association's proposal, any of the existing members of ..
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