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Suppose the economy is in a long-run equilibrium when the government increases spending on defense.
a. Draw an aggregate demand/supply diagram that illustrates the short-run effect of this increase.
b. In the short run, what happens to the price level and the level of output?
c. Now, draw an aggregate demand/supply diagram that illustrates both the long-run and the short-run effect of this increase if the government does not use any other policy action.
d. In the long run, what happens to the price level and the level of output?
e. Now, suppose the Fed responds by increasing the reserve requirement, draw an aggregate demand/supply diagram that illustrates both the long-run and the short-run effect.
f. What happens to the price level and the level of output in the long-run?
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An appreciation of the U.S. dollar would shift the ________. An increase in the costs of resources or inputs of production would shift the ________.
A 5 year old machine has SV = $1,200 if sold today, and $400 if sold 5 years from now. It's operating expenses are $800 per year. A new machine is available for $2400, has expected operating expenses of $500 per year, and a SV = $1,000 at the end of ..
Consider a public project to build a bridge. The government is deciding whether to undertake it or not. Let k = 1 if the bridge is built and k = 0 if the bridge is not built. The cost of building the bridge is C = 97. Assume the government knows θ. F..
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Consider an economy in which the amount of investment is equal to the amount of savings (i.e., the economy is closed to international flows of capital).
Which of the following is true under monopoly?
Kris borrows some money in her senior year to buy a new car. The car dealership allows her to defer payments for 12 months, and Kris makes 48 end-of-month payments thereafter. If the original note (loan) is for $28,000 and interest in 0.5% per month ..
q1. illustrate what are the key determinants of spectrum healthcare resources fixed cost and variable cost in
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Illustrate that an increase in government spending can improve consumer welfare.
q1. suppose that bargaining as envisioned by the coase theorem can take place and that the homeowners initially hold
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