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1. An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. What kind of gap-inflationary or recessionary-will the economy face after the shock, and what type of fiscal policies would help move the economy back to potential output?a. A stock market boom increases the value of stocks held by households.b. Firms come to believe that a recession in the near future is likely.c. Anticipating the possibility of war, the government increases its purchases of military equipment.d. The quantity of money in the economy declines and interest rates increase.2. In each of the following cases, either a recessionary or inflationary gap exists. Assume that the aggregate supply curve is horizontal so that the change in real GDP arising from a shift of the aggregate demand curve equals the size of the shift of the curve. Calculate both the change in government purchases of goods and services and the change in government transfers necessary to close the gap.a. Real GDP equals $100 billion, potential output equals $160 billion, and the marginal propensity to consume is 0.75.b. Real GDP equals $250 billion, potential output equals $200 billion, and the marginal propensity to consume is 0.5.c. Real GDP equals $180 billion, potential output equals $100 billion, and the marginal propensity to consume is 0.8.
A 1996 nill reforming the federal goverment's antipoverty programs limited many welfare recipients to only two years of benefits.A. How does this change affect the incentives for working
Monopolies are inefficient because A. a monopoly firm must compete, and competition is expensive B. a monopoly firm will always produce where price is equal to average total cost C. inefficiency is a barrier to entry D. a monopoly firm has no ince..
what are these prices? b) How much output is sold at these prices and what is the profit in each market? c) Based on your answer in part a, justify why would the firm charge same or different prices.
Discuss the function performed by a financial intermediary in linking surplus and deficit units in the financial market. What will happen in the financial market if the financial intermediary does not exist
If growth in labor supply is a source of economic growth, then we should just open our borders and let everyone immigrate to the U.S. Agree or disagree? When it comes to labor what matters for economic growth?
Why does taxing a product lead to deadweight loss? Use an appropriate graph to explain why the deadweight loss is greater the more elastic the demand for a product.
"Government spending is taxation. When you look at this, I've never heard of a poor person spending himself into prosperity; let along I've never heard of a poor person taxing himself into prosperity. Mr. Jones sends his daughter $500 for a semest..
Prepare functional specifications for the company's use of the Web and the Internet. Include links to and from other sites in your design.
THE SOUTH AFRICAN GOVERNMENT IS NOT PROVIDING ENOUGH WELFARE OR SUBSIDIES TO THE POOR AND UNDERPRIVILEDGED.
The definition of a price maker is a "firm with some power to set the price because the demand curve for its output slopes downward", which in effect, means those firms with a downward sloping demand curve have some market power. 1.How does a firm..
There are only two polluting sources in the region, each of which generates 10 units of pollution for a total of 20 units released into the environment. The government determines that emissions must be reduced by 10 units across the region to achieve..
Discuss and explain the major barriers to entry into a industry. Describe how each barrier can foster monopoly or oligopoly.
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