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As you know, the European Monetary Union (EMU) has recently adopted a common currency a single central bank (the ECB). Assume the cen- tral bank has direct control over the rate of inflation and has a standard loss function defined over output and inflation. Further suppose that all economies in the EMU follow the same underlying model, and that the ECB cannot commit to a particular policy. (a) Suppose a country has a different target level of output than the ECB. Further assume that a country which decides to leave the EMU pays some annual cost C in units of the loss function (this may be lost trade, fines, lost prestige, etc.) Work out the conditions under which a country will choose to leave the EMU. Provide an intuitive explanation for your answer.
(b) Now suppose that a country has a different weight on inflation in its loss function. Assuming the same cost C as in part (a), work out the conditions under which a country will choose to leave the EMU. Provide an intuitive explanation for your answer. Provide an intuitive explanation for your answer.
(c) Now suppose that a country has the same loss function as the ECB, but has a different slope to its short-run aggregate supply curve. Assuming the same cost C as in part (a), work out the conditions under which a country will choose to leave the EMU. Provide an intuitive explanation for your answer.
suppose the demand for guitars in state college is given by qd 8000 - 10p where qd is the quantity demanded and p is
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variation exists in virtually all parts of our lives. we often see variation in results in what we spend utility costs
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calculate the formulas for the monopolists' FC, VC, ATC, AVC, and AFC. calculate the profit - maximizing choice of output, price, and profits. Also, how come, in a perfectly competitive market, the burden of a tax is shared in the short run? Also, ..
there are probably a thousand macro economic indicators some measure the overall national economy some are more
Explain the difference between the demand curve facing a monopoly firm and the demand curve facing a perfectly competitive firm.
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