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1. Suppose that the Bank of Canada raises the interest rate at which the average household can borrow and lend. Assume that the typical household behaves according to Irving Fisher's two-period model, that consumption in both periods is a normal good, and that households are initially borrowers. Illustrate graphically how the increase in the interest rate in period one affects consumption in both periods.
2.a. What is “consumption smoothing”? Explain what key role “consumption smoothing” plays in the life-cycle hypothesis and the permanent-income hypothesis?
b. Assume you are a twenty-five year old who expects to work for 40 years and then enjoy 30 years of retirement. If you behave according to the life-cycle/permanent-income hypothesis, how would your current consumption change if:
1. You win $1,000,000 in the lottery this year.
2. You expect to get a $1,000,000 “signing bonus” when you get a job next year.
You plan a major adventure trip for the summer. You won’t be able to take your usual summer job that pays $6,000, and you won’t be able to live at home for free.
Explain the Law of Diminishing Returns and how it impacts cost of production. Be very detailed. You're welcome to use graphs or charts in the answer.
Presume that the economy has the following production function: Y/L = 8*(K/L) 0.5. Further presume that s = 0.2, gL = 0.3, and δ = 0.1. What is the value of the steady state capital-to-labor ratio?
Explain the function of an Economic Hit Mam from Perkins point of view - Explain why Perkins quit the Economic Hit Man business
Granny’s Butter and Egg Business is such that she pays an effective tax rate of 40%. Granny is considering the purchase of a new Turbo Churn for $25,000. This churn is special handing device for food manufacture and has an estimated life of 4 years a..
a. in the presence of an underground economy likely to result in a gini coefficient that overstates or understates
assuming that all other factors remain unchanged determine how a firms breakeven point is affected by each of the
Explain what is meant by diminishing returns. From these costs curves explain when diminishing return sets in? Why and explain the relationship between ATC, AVC and AFC.
what is the role of the u.s. government in terms of dealing with the problem of income inequalities? what are the
Perform the Test; H0: µ ≥ 22 versus HA: µ
Suppose the inverse market demand for silicone replacement tips for earbud headphones is p = pN - 0.1Q, where p is the price per pair of replacement tips, pN is the price of a new pair of headphones, and Q is the number of tips per week. Suppose ..
Suppose that Central Bank A's mission is to keep price level stable while Central Bank B's mission is to keep unemployment rate stable. These goals apply both to the short and long run. Explain graphically how each FED would react to a Stock marke..
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