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Derive an IS curve the usual way (create two points), assuming a closed economy. Now assume that an open economy exists. Use this change to derive a new second point on the IS curve and draw the implied IS curve for an open economy. Explain how this impacts the effectiveness of monetary policy. Is monetary policy more effective in an open or closed economy?
To get a loan from the federal reserve, a bank can: Which of the following economies did not experience a financial crisis in the last twenty years. Some economists argue that the Federal Reserve made the Great Depression ___ than it could have been ..
Analyze the situations involving risk below to determine if they involve Moral Hazard (M), Adverse Selection (A), or the Principal-Agent Problem (P). For Moral Hazard write “M” in the blank.
You are a business manager working for a firm in a purely competitive market and you just hired a summer intern who does not understand how to derive the firms’ short run supply curve from the firms’ marginal cost curve. Please explain this to the in..
This declaration would perhaps receive general agreement, but it is not always clear exactly Illustrate what concludes when something is in the public interest.
Even though some cities in Texas have the ability to design their own charters, most stick to 1 of the 4 primary types. What are the advantages and disadvantages of each?
Consider a simple one-period, closed economy model where the representative consumer has utility function u(C, l) and h available hours to divide between work and leisure. The representative firm has technology given by Y = zF(K, N^d ). Define a Comp..
Market demand for a product is given by P=700 – 10Q. Marginal cost is given by MC = 200. Find the equilibrium price and quantity if the market is competitive. Find the consumer and producer surplus. Find the price and quantity under monopoly. Find th..
Lisa is choosing between three alternatives: a) working on her job that pays her 60 dollars; b) writing a term paper which she values at 40 dollars; or c) going out with a friend, which she values at 80 dollars. The opportunity cost of writing the te..
Give an example of consistent Fiscal Policy and Monetary Policy that you would choose to correct unemployment gap (Recession) that you suspect in the economy?
Show graphically and explain the inefficiency of a tax on a good when there is no externality. Economists advocate charging a price and oppose mandating or subsidizing clean technologies. Give the economists' reasons for opposing mandates or subsidie..
In a Stackelberg industry with identical firms we know that firm 1, the leader, produces its monopoly quantity in equilibrium. Given this, does the Stackelberg leader necessarily earn a higher profit than the Stackelberg follower? Explain.
Discuss the tragedy of the commons in a free-market economy. Address the following in your response: Explain the concept of the tragedy of the commons Can it be avoided in a true free-market economy? Why or why not? Identify three government actions ..
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