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The following questions are based on open economy macroeconomic model. The answers must be written in your words along with graphical illustration. Without explaining in your words, the graphical illustration alone will not be credible. Also make sure you use the relevant symbols and notation on each of the lines and axis on the graph(s) to clearly indicate the working mechanism of variables. 2. a. ) Using the ZZ/Y and NX graphs, illustrate graphically and explain what effect a reduction in taxes will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibria. b. Using the ZZ/Y and NX graphs, illustrate graphically and explain what effect a reduction in foreign output (Y*) will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibria. c. Suppose the national output in the US is below the policy makers' desired level of output and is experiencing a trade deficit. Assume that the policy makers' goals are to achieve the desired level of output (i.e., full employment output) and balanced trade. Given this information, what type of exchange rate and/or fiscal policy can be used to achieve simultaneously these two goals? d. Using the ZZ/Y and NX graphs, illustrate graphically and explain what effect an increase in government spending will have on output, exports, imports, and net exports. Clearly label all curves and clearly label the initial and final equilibria.
Indentify one group that would benefit from deflation and that would lose. explain why each group would gain or lose from deflation.
Elucidate why we still say that raising cattle is land intensive compared with farming wheat or why not.
Suppose you are a manager at Bank of America and the Federal Reserve raises the required reserve ratio from 10 percent to 12 percent. What actions would you have to take? How would your actions and those of other bank manager’s end up affecting the m..
Assume that you borrow $15,000 for five years (annual payments) at a market rate of 5%. Assuming that inflation is 3.5%, what would the equivalent equal annual payment be in constant dollars? What is the Actual dollar amount of a $15,000 constant dol..
The last time the U.S. Post Office raised its prices for mail service critics of the rate increase argued that the Post Office's revenues would actually decline as a result of the price increase. the Post Office believes demand for mail service is el..
In the late 1990's, care leasing was very popular in the United States. A customer would lease a car from the manufacturer for a set term, usually two years, and then have the option of keeping the care. If the customer decided to keep the car, the c..
List one way that a market-based health insurance system fails to limit costs. Then, discuss how either the Affordable Care Act or a single-payer system would correct that failure.
Can you come up with any examples of either adverse selection or moral hazard affecting you or someone you know in their family life, love life, or job? (Here’s one to get started on: Is an obnoxious guy or an interesting guy more likely to start a c..
The government spends 13,00 billion on goods and services (a= 1300 )and levies on income tax equal to 20 y.the consumption function is c=300 +0.75di,where di is disposable income investment (i)is I =900and net exports are 100.Find the equilibrium gdp..
The graph to the right shows the Marginal Cost (MC), Average Total Cost (ATC), and Marginal Revenue (MR) curves for a perfectly (or purely) competitive firm. Note that the Demand (D) curve is the same as the MR curve for such a firm. Assume that the ..
Consumer surplus at any specific quantity is measured as the_________ distance between the demand curve and the level of the market clearing _______
Illustrate what is the present value assuming a discount rate. Level of consumption or saving will be illustrate what.
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