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1. Consider two projects. The first project pays benefits of $90 today and nothing else. The second project pays nothing today, nothing one year from now, but $100 two years from now. Which project would be preferred if the discount rate were 0%? What if the rate increased to 10%? 2. Suppose that the original before-tax demand curve is P = 98-2Qd and that supply is P = 2+2Qs. Now suppose a $3 unit tax is imposed on consumers.a. Use supply and demand diagrams to show the effect of a $3-unit tax imposed on the demand side. b. What is the before-tax equilibrium price and quantity?c. What is the after-tax equilibrium quantity?d. Calculate the economic incidence incurred by producers and the economic incidence incurred by consumers.e. How much tax revenue is raised?
Suppose the potential level of real domestic output (Q) for a hypothetical economy is $160 and the price level (P) initially is 200. Use the following short-run aggregate supply
describe how open market policy can be used to stimulate economic activity in the country
TRADE policy: We are now in a position to sum up our analysis of India's trade policy. First, India's trade policy has always been very intricately related to India's basic de
Should the government increase, decrease or remain the same in its level of intervention when it comes to mandating that companies provide product information to consumers? What ha
Q. Explain the Money market diagram? Let's begin by studying the money market when GDP is given. When Y is given, MD will only rely (negatively) on R and we can draw a figure w
If population growth carry on then there will not be sufficient resources around for everyone this will lead to an event such as famine / war, which will decrease the population.
Q. Relation between Money - wealth and income? Money isn't the same as wealth. An individual may be very wealthy however have no money (for instance by owning stocks and real e
concept of static and dynamic multiplier
A profit maximizing firm has a production function such that: Y=K2L2 a) If P=10,rk=2,andWL=3 , what would be its optimum be? How can you show that it is a maximum? b) How
The LM curve with inflation We know that LM curve will shift upwards when P increases (presuming MS is constant). This is still true though we can also add that LM curve glid
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