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Suppose that the tradeoff between unemployment md inflation is determined by the Phillips curve: U = u^n - alpha (pi-Epi) where u denotes the unemployment rate, pi? the natural rate of unemployment, pi the rate of inflation, and Epi the expected rate of inflation. In addition, suppose that the country involves two political parties, the Left and the Right. Suppose that the Left party always follows a pol icy of high money growth and the Right party always follows a policy of low money growth. What political business cycle pattern of inflation and unemployment would you predict under the following conditions? a.Every four years, one of the parties takes control based on a random flip of a coin. [Hint: What will expected inflation be prior the election?] b.two parties take turns.c. Do your answers above support the conclusion that monetary policy should be set by an independent central bank?
Determine the firms optimal advertising-to-sales ratio and if the firms revenues are $50,000, what is its profit-maximizing level of advertising?
At the national level, public debate has centred on the performance of the main monetary measure – GDP. Each year we must do better than the last; otherwise we are officially in recession…while GDP growth is important for raising living standards, it..
Use the aggregate demand (AD) and aggregate supply (AS) model to show and discuss the effects of the following events on real output (Y), general price level (P), and employment, in the short run and in the long run. Assume that economy is initially..
an angel investor is considering investing in one of two start-up businesses and is evaluating the expected returns
Why is a depreciation of a country currency not necessarily a bad thing? Why is a country's appreciation of its currency not necessarily a good thing?
Explain how has technology impacted the workplace over the last ten years. What impact have these changes had on costs and prices.
Suppose the government institutes a new sales tax on shoes, which are produced by a competitive constant-cost industry.
Government play in affecting the supply also demand of a key commodity such as gasoline or electricity?
In a closed economy without a government sector, consumption is determined as 80% of the income available to households. Investment is autonomous at a level of £450.
Mildred buys 12 DVD's when the price of a DVD is $9, 9 DVD's when the price of a DVD Is $11, and 8 DVDs a month when the price of a DVD is $15.
What is the best way to deal with "Free Riders?" Comment on at least 2 areas where Freedom Riders are a problem.
A firm has a net monetary liability balance of $10,000 on January 1, 2001. During the first third of the year, the balance decreased to $7,500. During the second third of the year, the balance increased to $12,500.
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