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Given that the US economy production function (to calculate current GDP and potential GDP) is : GDP = Y= F(K,L,N) = 0.04K+0.03L+0.03N. The current GDP is produced with K=200, L=100, and N=100, the full employment GDP (potential GDP) can be potentially produced with K=225, L=150 , and N= 150. Given that the average MPS (not MPC) is 0.25 (for problems 1, 2, and 3), and active population is 100 millions. GDP is in Trillion dollars
To apply supply side economics, given that only 40% of the tax credits given to businesses are reinvested, how much tax credit do investors need to move the economy to the full employment level? You should assume that consumption and government spending are not going to change. Hint: First, find the GDP gap, then find out how much extra investment spending is required to fill up this gap. Finally, how much tax cut is needed for the businesses to stimulate the required additional investment spending, knowing that from every dollar of tax cut, businesses will invest only 40%?
Explain why it is not possible for one agent to have a comparative advantage in all goods, a worked example with calculated values would be useful.
Is it possible for a country to have a current account deficit at the same time it has a surplus in its balance of payments? Explain your answer, using hypothetical figures for the current and no reserve financial accounts. Be sure to discuss the pos..
Jim accidentally runs over Mary in the parking lot. Mary was walking to her car (maybe she wasn’t paying really close attention to traffic), Jim didn’t look both ways, so he ran her right over. If the law of the jurisdiction is simple (pure) negligen..
q.although economists routinely use gross domestic product gdp and other national income and product statistics in
Explain how can tax cuts help revive the economy include discretionary fiscal policy, expansionary fiscal policy, tax multiplier, Aggregate Demand-some-not all--of these and/or other terms from this week.
Use the data on U.S. real GDP below to compute real GDP per person for each year. Then use these numbers to calculate the percentage increase in real GDP per person from 1987 to 2005.
Identify opportunity cost of increase divestment. What will happen to future production possibilities if investment increases.
The federal government recently announced intent to buy large numbers of Treasury Bonds. Explain how the federal government expects this to improve the economy. Compare this to other companies buying their own stocks. Make a prediction as to the succ..
Rent controls force landlords to price apartments below the equilibrium price level. An immediate effect is a shortage (excess demand) of apartments, because the quantity of apartments demanded is greater than the quantity supplied at the regulated p..
Describe demand and marginal income curves faced by a industry in a purely competitive market. Are they different from those faced by a industry in oligopolistic competition.
A person who paid $10 for an umbrella in the U.S. sees the exact same umbrella in a store in London, England for 6 British pounds. If the person could expect the real exchange rate to be 1 U.S. umbrella per 1 English umbrella, then the person could i..
Net foreign direct investment has been a (significant) positive number for the US since the mid 1980s. That represents more investment flowing into the US than out. Given that, one would normally conclude that the flow of net interest payments would ..
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