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In the Friedman-Lucas money surprise model, suppose that the central bank wants to reduce the price level. Suppose the central bank has two options: (i) announce in advance that the money supply will decrease; (ii) surprise the public with a decrease in the money supply. Which option is preferable? Explain with the aid of diagrams
A risk-neutral consumer is deciding whether to purchase a homogeneous product from one of two firms. One firm produces an unreliable product and the other a reliable product. At the time of the sale, the consumer is unable to distinguish between the ..
Explain what happens to observed prices in posted offer and double auction markets when there at least two sellers.
Trace out exactly where this 100 increase in income goes in the second round and compare to our simpler treatment with a closed economy and lump sum taxes.
Consider an economy where there are N consumers, each of them having one unit of available time.
Buffer stocks often have been excessive and costly to maintain because:
Suppose the firms compete in quantities. If firm 1 deviates from collusion in one period, what is the profit of firm 1 in that period in subsequent periods.
Which economic decision makers conclude the provider of labor. Illustrate what is their goal also illustrate what decision criteria do they utilize in trying to reach which goal.
What are the factors that affect pay differentials? How does each factor increase or decrease relative wages?
Suppose that the US current account deficit must be reduced. Explain in terms of CA ≈ (S – I) + (T – G) what must be done to reduce the current account deficit. Why will this be difficult? (Hint: It may be helpful to think about the household that ha..
The tax on cigarettes in New York City is the highest in the nation- $5.85 per pack. Does this tax raise a lot of revenue for New York City? Why or why not? What are some of the secondary effect of this tax?
What is the situation in the area of trade (use a dollar amount)? What do keakages equal (measured in dollars)?
The Babylonians studied problems which lead to simultaneous linear equations and some of these are preserved in clay tablets which survive. For example a tablet dating from around 300 BC contains the following problem:
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