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Consider the following changes in the macroeconomy. Show how to think about them using the IS curve, and explain how and why GDP is affected in the short run.
The Federal Reserve undertakes policy actions that have the effect of lowering the real interest rate below the marginal product of capital.
Consumers become pessimistic about the state of the economy and future productivity growth.
Improvements in information technology increase productivity and therefore increase the marginal product of capital
John Taylor of Stanford University proposed the following monetary policy rule: R_t-r ¯=m ¯(π_t-π ¯ )+n ¯Y ~_t. That is, Taylor suggests that monetary policy should increase the real interest rate whenever output exceeds potential.
What is the economic justification for such a rule?
Combine this policy rule with the IS curve to get a new aggregate demand curve. How does it differ from the AD curve we considered in the chapter? Consider the response of short-run output to aggregate demand shocks and inflation shocks.
Pick two similar small businesses in the same industry with which you are familiar, one successful and one not so successful. Describe them in a post, and compare and contrast these businesses. What is the difference in management style between the..
Many hotels charge higher prices during the holiday period and yet there is higher demand for hotel accommodation during these periods. Is this a violation of the law of demand? Explain your answer and use theory and illustrations to support your ..
In 1999, India did not have shopping malls. It now has more than 100 malls. explains this rapid development.
(b) Why is the firm's demand curve flatter than the total market demand curve in monopolistic competition (c) Suppose a monopolistically competitive firm is making a positive economic profit in the short run. What will happen to its demand curve i..
What does this graph tell us the nature of economies of scale in the beer brewing industry b. What are the particular problems associated with the firm represented by the SATC curve shown in the graph Does it represent a firm that would be able to..
Alexa likes ice cream, but dislikes yogurt. if you make her eat another gram of yogurt, she always requires two extra grams of ice cream to maintain a constant level of satisfaction. on a graph with grams of yogurt on the vertical axis.
If the manager of the open market desk hears that a snowstorm is about to strike New York City, making it difficult to present checks for payment there and so raising the float, what defensive open market operations will the manager undertake?
The first acre can produce 1000 bushels of wheat, the second acre 900, the third 800, and so on. How much revenue will each acre generate? what are the TR and MR for each acre?
An economy is operating with output $400 billion below its natural rate, and fiscal policy-makers want to close this recessionary gap. The central bank agrees to adjust the money supply to hold the interest rate constant, so there is no crowding o..
Find one example in the article of any one of the following four possible shifts of supply or demand: Leftward shift of the supply curve; Rightward shift of the supply curve. Leftward shift of the demand curve; Rightward shift of the demand curve.
The Case in Point on Externalities, Cigarettes, and Smoking suggests that smokers generate: a-external benefits to society by dying early, thereby subsidizing the retirement costs of the rest of the population. b-external costs to society by dying ea..
Why is the long-run aggregate supple curve vertical Explain the shape of the short run aggregate supply curve. Why is the short-run curve relatively flat to the left of the full-employment output and realively steep to the right
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