Reference no: EM131056740
ANALYTICAL PROBLEMS
PROBLEM 1
Suppose that in 2012 the economy could be described by the Keynesian model, that it was in general equilibrium with an inflation rate of 3%. Assume that the adjustment process to long-term equilibrium takes 4 years, that demand shocks have a larger effect on output than any inflation or supply shocks, and that any long-run supply shock effect on full-employment output is larger than any short-run inflation shock effect on output.
In 2013, oil prices doubled, which added 2 percentage points to the inflation rate. As a result, consumers' expected future income declined substantially.
In 2014, oil prices fell in half, which subtracted 2 percentage points from the inflation rate. As a result, consumers' expected future income returned to its 2012 level.
a) Based only on this information, use a AD - AS model diagram to clearly and accurately show:
• The economy's output level and inflation rate in 2012 (in black),
• The economy's output level and inflation rate in 2013 (in red),
• The economy's output level and inflation rate in 2014 (in blue),
• The economy's output level and inflation in 2015 (in green), and
• The economy's output level and inflation rate once general equilibrium is re-established (in black).
b) Provide a brief economic explanation of the economy's initial equilibrium, of EACH of the changes that you have made, and of the final equilibrium that you have shown in your diagram above. Be sure to discuss the adjustment process that the economy undergoes with respect to economic output and inflation for EACH year
PROBLEM 2
Argentina and Brazil are major trading partners. Assume that both economies are in general equilibrium, can be described by the Keynesian model, and that changes in economic output from domestic events are greater than from international events.
Now suppose that Brazil experiences a sharp decline in the expected future marginal product of capital at the same time that Argentina reduced its tax rates significantly. In reaction to these events, the Brazilian central bank immediately responds to keep Brazilian economic output at its full-employment level.
a) Based only on this information, use a 2-country, open economy IS - LM diagram to clearly and accurately show:
I. The initial general equilibrium situation in both countries (in black),
II. The short-run effects on economic output (in red and blue as needed).
b) Provide a brief economic explanation of the changes you have shown in your diagrams above. Be sure to compare the level of economic output, the real interest rate, and the exchange rate between the initial equilibrium and the new short-term equilibrium that exists in each country after Brazil's monetary contraction.
|
Discuss the formation of the european union
: Discuss the formation of the European Union, and the introduction of the Euro. Discuss the key legal and financial steps did they take to achieve the EU and enter into a common currency, and the challenges they faced (include a timeline).
|
|
Do the results match the expected linear behavior
: The first program should acquire (say) 40,001 write locks on a file. These locks are placed on alternating bytes of the file; that is, locks are placed on bytes 0, 2, 4, 6, and so on through to (say) byte 80,000. Having acquired these locks, the p..
|
|
Question regarding the unadjusted historical costs
: The HC method, which uses unadjusted historical costs, does not take into account depreciation expenses, purchasing power, and unrealized gains in replacement value.
|
|
The failurerate increases or decreases with age
: Turbine disk. Table 2.2 shows turbine disk data (rounded to 100 hours) (a) Do the hazard calculations.
|
|
Show the initial general equilibrium situation
: Based only on this information, use a 2-country, open economy IS - LM diagram to clearly and accurately show The initial general equilibrium situation in both countries (in black),
|
|
Adjustable rate mortgages
: An explanation of your understanding of what loans really cost to consumers, and How you feel about adjustable rate mortgages (ARMs) and borrowing practices
|
|
Determine the rules on that implementation
: Are locks granted in FIFO order? c) If you have access to some other UNIX implementation that provides flock(), try to determine the rules on that implementation.
|
|
Cost of a planned renovation and expansion of facility
: Then negative cash flow in year 5 reflects the cost of a planned renovation and expansion of the facility. Finally, in year 10, Garmen estimates some recovery of its investment at the close of the lease, and consequently a higher-than-usual cash f..
|
|
Estimate a regression of salary on firm sales
: Estimate a regression of salary on firm sales and market value in constant elasticity (log-log) form. Interpret the e?ects of sales and market value on salaries of CEOs
|