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Suppose the United States (country a)and Great Britain (country b) have foreign currency controls in effect The demand for money is growing at 10.25 percent in the United States and at 2 percent in Great Britain (net rates) each period. The fiat money supplies in the United States and Britain are growing at 5 and 6.25 percent net rates in each period.
1. Defining the exchange rate (et) as in the text, what are the units in which the exchange rate is measured, US. dollar per British pound or British pounds per U.S. dollar?
2. What is the rate of return on fiat money in the United States? In Great Britain?
3. In a system of flexible exchange rates, what is the time path of the exchange rate between the United States and Great Britain (et+i/ et)
4. Suppose the United States desires to fix the exchange rate. How can the U.S. government set its gross rate of fiat money creation e to accomplish this goal?
You work for the company that is being accused of monopoly behavior, given its large size. Comparisons are made to the industry standard, where each establishment has on average about 15.1 employees.
Evaluate the role and the effectiveness of the Federal Reserve in stabilizing the current economy and determine which economic indicators the Federal Reserve should analyze so it can better stabilize this particular economy.
Firms 1 and 2 produce an identical product and serve the market described by the demand function P=100-Q, where Q=Q1+Q2. Firms compete by choosing their output levels. Firm 1's total cost function is TC(Q1)=100+20*Q1. Firm 2's total cost functi..
consider a couples decision about how many children to have. assume that over a lifetime a couple has 200000 hours of
There are proposals to change the U.S. federal tax system from primarily an income base to a consumption base. One popular proposal comes from Cornell economist Robert Frank. You may explore his proposal in the video titled, "Robert Frank: Consumptio..
a horse walks into a bar. the bartender says why the long face? the horse says i am willing to buy as much beer as you
Using a prisoner's dilemma game such as the "wedding game." explain how a positional arms race can occur. In your answer be sure to explain positional arms races, the nature of the wedding game, etc.
Assume that total output is determined by the formula: number of workers × productivity = total output (output per worker) If an economy's productivity increases by 5 percent but the number of workers declines by 3 percent a year, how will the out..
Another group of economists, those who hold to the quantity theory of money, believe that V (the velocity of money) is predictable and otherwise unchangeable and that Q (the quantity of goods and services produced) is steady. Is their view of the eco..
Describe why some firms might suffer diseconomies of scale. Do you know any examples? Could GM be an example of diseconomies of scale?
Why is the pricing of a Gillette safety razor a form of two-part tariff Must Gillette be a monopoly producer of its blades as well as its razors Suppose you were advising Gillette on how to determine the two parts of the tariff.
Where quantities represent the number of prescriptions. Assume that the resale or arbitrage among markets is impossible and that marginal cost is constant at $2 per prescription in both markets. Monthly fixed costs are $1million in the US and 500,000..
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