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In 2012, the International Monetary Fund suggested in its October World Economic Outlook that it may have underestimated the impact of deficit cuts on economic growth. In countries undergoing fiscal contractions, especially those in Europe at the time, this is important. The report then discussed the problem of debt sustainability, and later noted that in the 1980s the fiscal multipliers from global economic models were estimated to be between 0.4 and 3.5. During the next three decades the fiscal multiplier had fallen to be between 0.2 and 1.5, depending on the model.
a) Briefly explain how the size of the multiplier may affect a government's debt sustainability.
The reason for the wide range of estimates of the multiplier comes down to the assumptions about the way consumers, corporations and other government policies respond.
b) Briefly describe how the monetary policy response to fiscal policy is likely to affect the multiplier. How does your analysis change if you assume a fixed exchange rate instead of a flexible exchange rate?
c) Explain how the credibility of fiscal cuts likely matters, e.g. how it affects the performance of the economy as well as debt sustainability.
Explain the relationship between consumption and saving in the Keynesian model
Growth rates in follower nations such as South Korea also Hong Kong averaged about 10 percent every year.
While sitting in your office one evening, you begin to think about some of key microeconomic messages you want to communicate to Board. Find equilibrium quantity and price.
Discuss the ethical issues relating to corporate spending, both in for-profit and not-for-profit.
1. What is the role of the financial system? Describe two markets that are part of the financial system in the U.S. economy?
Which of the following would not cause any kind of an outward shift of an nation's production possibilities frontier (PPF)?
What if you knew that in Firm A the quantity of labor demanded is 15,000 when the wage is $11 and 17,000 when the wage is $8.
Suppose instead that you expect your costs and your prices to increase by 3 percent. But the price of the oven is still $10,000. Do you change your decision about whether to purchase the oven with internal financing? Do you change your decision ab..
They wish to compute their average salary. However, nobody is willing to reveal an iota of information about his/her own salary to anybody else.
Explain why the consideration of opportunity costs may be very relevant to a firm. How can opportunity costs affect a business decision?
Give examples of how to use the concept of elasticity 1) including an explanation of why or how businesses might use the concept of elasticity.
Consider the different types of devices that can be on a network, the different business value.
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