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Discuss how and why the effectiveness of fiscal policy depends upon the slope of the LM curve. Hint: Discuss how the behavioral sensitivities (c1, and c2) determines the LM slope, and how changing c1, and c2 influences the fiscal policy effectiveness.
Business employs resources to use in the production and sale of a good or service. Accounting profit is typically used as a way of evaluating the success of a business, but economists argue that economic profit is more relevant to determining whether..
QE3 followed QE2 and Operation Twist. Which of the following best explains how QE3 differed from the other two in order to make it more effective? QE3 promised a much larger expansion of reserves. QE3 gave a much stronger forward commitment as to whe..
Which of the five characteristics listed in the text for human service professionals do you think is most important? Explain why.
Suppose that Jack and Jill use a tit-for-tat scheme to encourage cartel pricing. Jill chooses the low price for two successive months, and then switches to the high price. The two firms will deviate from cartel pricing for a total of _________ months..
This unit describes key characteristics governing how firms operate in the short run and the long run. Perhaps the most important concepts in the unit are the shapes and the logic of the short-run and long-run cost curves. Can you explain why average..
You have estimated that all consumers who buy from your firm have identical demands for your product. Each customer's demand is given by Q = 20 - (P/2), and your total cost of production is TC = 45 + 20 Q. You want to devise a two-part pricing strate..
A firm has $5 million in sales, a Lerner Index of 0.75, and a marginal cost of $45, and competes against 3,000 other firms in the relevant market. What price does this firm charge its customers? By what factor does this firm mark up its price over ma..
Show how the IS curve and the LM curve can be shifted to get an increase in output without a change in interest rates. What kind of mix of monetary and fiscal policy is needed to do this? Will a reduction in interest rates, while holding output const..
We operate 300 days per year and have found that an order must be placed with our supplier 6 working days before we can expect to receive that order.
Explain the difference between real exchange rate and nominal exchange rate. What determines the real exchange rate and the nominal exchange rate in an economy?
Under the household production model, the full cost of any activity equals:
In the Solow model with taxation, the government’s budget is in balance, i.e., its expenditures are equal to the tax revenues collected (Lty). Suppose that the government runs persistent budget deficits financed by additional direct and indirect taxa..
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