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Consider a world with some capital mobility; the home country's capital account improves as domestic interest rates rise relative to the world rate of interest. Initially, the home country is in internal and external balance. (Draw the IS , LM , and BB schedules.) Assume now that the rate of interest abroad increases.
a. Show the effect of the foreign interest rate increase on the BB schedule.
b. What policy response would immediately restore internal and external balance?
c. If the authorities took no action, what would be the adjustment process along the lines described by the monetary approach to the balance of payments?
Global Investment Group operatesin a perfectly competitive industry with the following Cost andRevenue data Average Total Cost = $2.50; Quantity sold =9000 Units; Price Per Unit = $3.50; Marginal Revenue = $3.50;Marginal Cost = $3.50:
Let p* be the equilibrium price and y* theequilibrium quantity, so that p* = A-By*. Now suppose thedemand in the market shifts, so that the new demand curve is p =A'- B'y*. Hence, if the firm does not change its quantity
f(L,K) = ln(L+1) + ln(K+1) (1) Does this function has any corner solutions? If so, what are the values (2) For what values of (w,r,y), is there an interior solution for cost minimization (3) Find all possible interior solution for (L*,K*)
XYZ Corporation is a manufacturer of widgets. Over the past several months, it has been selling its widgets for $100 each and unit sales have averaged 5,000 units per month. This month its competitor, ABC, Inc. raised the price of its widgets from..
Solve Tracy's problem of how often to go to the ATM when nominal interest rate on her bank account is 10%, she spends $30 each day, it cost her $0.50 each time she uses the atm, and she thinks that there is a 15% chance.
Suppose that the price of a stock is $50 at the beginning of a year and $53 at the end of the year, and it pays a dividend of $2 during the year. Calculate the stock's current yield, capital-gains yield, and the return.
Given the table below, graph the demand and supply curves for flashlights. Make certain to label the equilibrium price and equilibrium quantity. What is the equilibrium price and the equilibrium quantity
a. Jack consumes two goods: food and leisure. He works for 8 hours per day and earns a wage of $8 dollars per hour. His rich uncles also give him around $20 per day. Illustrate Jack's choice of work and leisure using an indifference curve and a b..
In a hypothetical economy, the monetary aggregate M1 equals 120,000 pesos, and M2 equals 320,000 pesos. The following information about this economy is also available: Money market deposit accounts 80,000 Amount of currency held outside of banks.
a broadcasting executive is reviewing the prospects for a new television series,according to her judement , the probability is 0.25 that the show will achieve a rating higher than 17.8, and the probability is 0.15
If the two firms split the difference, whats the price of a permit?
Suppose the above government is producing $600 of real GDP, whereas the potential real GDP (or full-employment real GDP) is $700. How large is its budget deficit Its cyclically adjusted budget deficit
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