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Suppose that new data indicates that the global economy is slowing down, and we are heading for another global recession. As a result, there is pessimism among domestic consumers and investors affecting consumer and investment spending.
a) Show this development using Aggregate demand/Aggregate Supply (AD-AS) model of the domestic economy. (Hint: Begin with the AD-AS diagram for the economy that shows the economy is in long-run equilibrium). Make sure to label the variables represented on the X-axis and Y-axis of the graph clearly. Also mark the curves in the graphs clearly indicating what they represent. Marks will depend on the neatness and completeness of the graph.
b) What are the fiscal and monetary policy measures that the policy makers (government and the central bank) can undertake to correct the impact of the fall in spending? (Explain the policy measures in writing. Diagrammatic representation of the effects of these policies not required).
c) What are the possible long run impacts of the recommended policy measures in part (b)? (Explain the impact in writing, a diagrammatic representation not required).
A deposits $500 to her account at this bank. Show the effect of this transaction on bank's balance sheet. How much is its excess reserve after the transaction?
Has the Jones Act outlived its purpose? What governmental policies and regulations could enhance the prosperity derived from ports and their operations?
If the marginal product of the second worker hired by a firm is 14 units and the price of a unit of output is $7 regardless of the quantity of output sold, then the marginal revenue product of the second worker is?
When a man retires, he invests $20,000 in a bank, interest at 8% per annum of the amount to his credit to be added at the end of each year. When the interest for each year has been added,
Bow Wow Bazaar is a increasing company specializing in gourmet dog food and supplies in Florida resort communities. BWB's demand and cost information are as follows:
ECON 3102-004 Intermediate Macroeconomics PROBLEM SET. Clearly state the problem of the firm. Find the condition that characterizes the solution to the firm's problem. In no more than 3 lines, explain the intuition behind your condition
Discuss the toxic effects of these products. How are these disinfectant bi-products removed during water treatment? Knowing the problems associated with using chlorine, would you change the disinfection step in water treatment? Why or why not?
Why do countries repay their foreign debts? Why don't countries repay their foreign debts and what is the risk with exchange rates when they are fixed? What is the risk with exchange rates when they float?
Discuss the impact of foreign economic aid from rich countries to LDCs and should developing nations continue to seek such aid?
China's Thirst for Gas: Hurricanes in the Gulf of Mexico, deteriorating pipelines in Alaska, and conflict in Iraq can cause gasoline prices to rise.
Illustrate what did classical economists assume about the flexibility. What disagreements did Keynes have with classical economists.
Q1. Explain the distinction between total and partial constraints. Q2. Explain the difference between a weak and a strong entity set.
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