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Fiscal policy consists of using government spending and/or taxes, to "manage" the economy. President Obama used almost $800 Billion in spending to try and stimulate the economy. President Trump is using a whole lot of tax reductions to do the same thing. So which is a better tool to get the economy going again, government spending a lot of money or cutting taxes by a bunch? Why?
Straker Industries estimated its short-run costs using a U-shaped average variable cost function of the form and obtained the following results.
Given stable demand and supply curves for product "X", we can expect a government-mandated increase in the price of "X" to: If the supply and demand curves for a product both decrease, we can say that equilibrium:
In the early 2000s, analysts feared that low academic achievement in math in the United States may reduce U.S. economic growth by as much as half a percentage point a year. "That drag will become increasingly apparent…as other countries dismantle reg..
Explain how the following events would affect the demand for labor. A new education program administered by the company increases labor's marginal product.
Suppose that the long-run aggregate supply curve (potential output, Y is vertical at Y = $3,000 while the short-run aggregate supply curve is horizontal at P = 1.0 (and once again, P = 1.0 is the SRAS Curve, in other words). If the macro economy is i..
A decrease in the investment rate: Suppose a country enacts a tax policy that discourages investment, and the policy reduces the investment rate immediately and permanently from ¯ s to ¯ s0. Assuming the economy starts in its initial steady state, u..
You have just been hired as manager of a new golf club. The golf club has market power over its members. The club owner wants you to come up with a two-part pricing strategy to maximize profits for the club. The average golfer’s monthly demand is P =..
One of the most important debates during the Constitutional Convention in 1787 was about the power and size of government. If the Founding Fathers could view the government of the United States today, which side of that debate would think that they w..
Consider 2 firms, each has MC = 0. The 2 firms compete in quantity in the market with inverse demand P = 150-10Q where Q is the economy’s total output. If the two firms each starts at 0 production level and has to decide whether it should increase pr..
Using the following exhibit from the textbook, explain how the U.S. can gain in trade even though it has an absolute advantage in both shoes and refrigerators.
An engineering consulting firm is working alongside engineers from Ford Motor Company comparing two SUV models to launch for next year’s market. At an interest rate of 15% per year, which model should they launch if they want to save as much money as..
Job B looks more attractive by using simple arithmetic in a static world; but since these will occur in different periods, we know that the best way to evaluate each one is by getting the net present value of each job using each individual's discount..
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