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Consider two identical economies A and B that abide by a standard Keynesian economy with partially sticky prices. Suppose the economy A is populated by agents with adaptive expectations and economy B is populated by agents with forward looking expectations. More specifically, Type A agents construct price expectations according to Pet = Pt-1 and agent B has Pet = Et(Pt+1), in which Et(Pt+1) represents current expectations of next period's price level .Suppose both governments announce today a marginal income tax τ that will be paidentirely by the workers. The tax still needs to be approved by both houses of Congress and the process is enacted in the next period (t+1).If the only goal of the income tax is to maximize revenue, say, Revenue t = τYt. What can we say about economies A and B at time t (i.e., in the short run)?
A. Tax revenues will be higher in A. The timing in the Congress decision makes no difference.
B. Tax revenues will be higher in B. The timing in the Congress decision makes no difference.
C. Tax revenues will be higher in A. If Congress B wants the same level of revenues as in A then they need to surprise the agents.
D. Tax revenues will be higher in B. If Congress A wants the same level of revenuesas in B then they need to surprise the agents.
Discuss the motivational implications of a job which provide autonomy and personal responsibility to the employee. Discuss the motivational implication of a job involves not much significant task.
If an economy experiences a decrease in consumer spending, most economists believe:
A common marketing tactic among many liquor stores is to offer their clientele quantity or volume discounts.
Suppose further that the MCP is 0,8 if the government wants to increase the real GDP to 2000 billions, by how much should the government increase /decrease its lump-sum taxes? Assume the price level is fixed.
Using the selected concepts and terms from your selected readings, prepare a 1,050-1,750- word paper in which you describe a negotiation situation that you have participated in
If a firm's marginal revenue from its 100th unit of output is $50 and the marginal cost from its 100th unit of output is $45, then in the short run this firm should:
You buy a new pair of shoes on sale. The printed receipt states very clearly that the shoes are not returnable. After you get them home, you wear the shoes around the house for a day and decide that they just don’t fit you correctly.
How many of the following four business cycle facts can be explained if the primary cause of business cycles is temporary changes in total factor productivity: procyclical consumption, procyclical investment, procyclical employment, and procyclical r..
John Maynard Keynes who is considered to be the father of Macroeconomics by many once said "In the long-run we are all dead” to emphasize why decision-makers should not worry about long-run effects of policies. As we have also learned in this module ..
The initial impetus for the Food Drug and Cosmetic Act and the Pure Vaccine Act included:
Suppose that, in a perfectly competitive market at the profit-maximizing quantity, the market price is greater than average total cost. Carefully explain what will happen to the number of firms, the market supply, and the price of the good as we move..
Suppose the federal government has no national debt and spends $100 billion, while raising only $50 billion in taxes. What amount of government bonds will the U.S. Treasury issue to finance the deficit? Suppose the media report that the federal defic..
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