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Suppose the American economy is in long-run equilibrium. Now assume that the Fed decides to sell government bonds to the public.
1) What is the effect on the money supply? Use the diagram of market for money to show how the Fed’s action affects the federal funds rate (or the nominal interest rate). Also explain the intuition behind the change in the change of fed funds rate/nominal interest rate.
2) Assume there is no change in expected inflation in the short run, what happens to consumption, investment? Explain. (we assumed closed economy)
3) Using your conclusions from part 2), explain and show graphically how the Fed’s action affects aggregate demand. What happens to the price level and to aggregate output in the short run? 4) Explain why the economy in part 3) is not in a long-run equilibrium. Explain the transition to the long run. Illustrate your answers using a diagram.
4) Explain why the economy in part 3) is not in a long-run equilibrium. Explain the transition to the long run. Illustrate your answers using a diagram.
XBC Inc. is planning to buy a new car. Model A costs $22,000 and is expected to have a life of 4 years. Model B costs $35,000 but it is expected to last 6 years. Model B provides a better warranty and it will save the company an average of $1,000 per..
Ensure to you remain focused on strategy, structure, culture, leadership, teams, motivation, risks, resources, budgeting, scheduling, evaluation, and control. In addition make sure to create presentation notes… Address the following questions in your..
Explain how globalization in pharmaceuticals occurred with respect to both distribution of medicines in new markets as well as shifting of research and development as well as the manufacturing to lower cost markets.
Assume that the currency-deposit ratio is 0.5. The Federal Reserve carries out open-market operations, purchasing $1 million worth of bonds from banks. This action increased the money supply by $2 million. What is the reserve-deposit ratio?
determines the net weight of each, and computes the mean of these 16 weights with the sample standard deviation, s= 0.25.
q1. you have used particular bras well as well as type of sunscreen for several years but after discovering that some
What are the qualitative differences between oligopolistic, monopolistic, and competitive markets? What market structure does your selected firm for group analysis operate in? What evidence can you provide?
What lessons should companies learn from Siemens’ reliance on bribery?
Assume two firms, A and B, serve a market with demand D(p) = 100 minus (p). Also assume that (i) firms compete for market share (quantity competition) and (ii) firm A has cost function cA(Q) = 2Q and firm B has cost function cB(Q) = Q. Describe this ..
A sports store puts designs 12 different designs on sweat shirts. Setup between each design takes an hour and costs $18,000. Once setup, at a cost of $8,000 they can produce 1,000 units. Does this production exhibit scale economies or scope economies..
If I produce 20,001 copies my total cost will rise to $750.02, therefore my marginal cost of producing copies must be increasing.” Draw a graph to illustrate your answer.
A suntan lotion company is interested in expanding to another market. In Miami, there is a 60% chance of selling 5,000 units at a $5 profit/unit, a 20% chance of selling 4,000 at a $8 profit/unit, and a 20% chance of losing $5,000. In Las Vegas, ther..
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