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1. What does the purchasing power of a money mean? How can it be measured?
2. Suppose the government releases information that causes people to expect that the purchasing power of a money in the future will be less than they previously had expected. What will happen to the exchange rate today? Why?
3. What is the difference between a price level and a price index?
4. What do economists mean by the law of one price? Why might the law of one price be violated?
5. What is the value of the exchange rate that satisfies absolute PPP?
6. If the actual exchange rate for the euro value of the British pound is less than the exchange rate that would satisfy absolute PPP, which of the currencies is overvalued and which is undervalued? Why?
Do anticipated changes in m (that is, changes that are expected as of when rigid-price firms set their prices) affect y and Find the first-order condition for the period-2 policymaker's choice of G2 given D.
Compute total revenue, marginal revenue, marginal cost, and average total cost of this natural monopoly. What is the profit maximizing output and price for this natural monopoly when the government does not regulate it?
You are a division manager at Toyota. If your marketing department estimates that the semiannual demand for the Highlander is Q = 150,000 - 1.5P, what price should you charge in order to maximize revenues from sales of the Highlander?
Elucidate how the enterprise zones could be utilized to enhance the economic development implications of your policy issue.
The interest rate is tied to the economy. Based on your opinion, will the economy grow or recede for the rest of 2011 and 2012? Will the pace of growth (or recession) fast or slow? The current interest rate is very low. Do you think the interest rate..
Elucidate the bumper harvest increase or decrease the total revenue of American wheat farmers. How could you have predicted this from your answer to part a.
You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q=20-2P and C(Q)=104-14Q+Q^2
Which economic system is best suited for handling a crisis of epic proportions (hurricane, flood, blizzard, forest fire, etc.)? Why? Describe and explain why a socialist system might be
If the demand for money depends positively on real income and depends inversely on nominal interest rate, determine what would happen to the price level today if the central bank declares.
Illustrate what is the purpose of the foreign exchange markets
Compare the monetary base to M2 on the grounds of controllability and measurability. Which do you prefer as an intermediate target? Why?
A study sponsored by the American Medical Association suggests that the absolute value of the own price elasticity for surgical procedures is smaller than that for the own price elasticity for office visits. Explain why this would be expected
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