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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?
Multiple Expansion We have seen that a single bank in a banking system can lend rupee for rupee with its excess reserves. What is the lending ability of the commercial banking
dynamic multipier
EXPLAIN THE 5 SECTOR MODEL (OPEN ECONOMY) IN INCOME DETERMINATION
Christina Romer and Jared Bernstein in "The Job Impact of the American Recovery and Reinvestment Plan" calibrated the impact of the proposed expansionary fiscal policy (we know it
Why is private property, and theand the protection of property rights , so critical to the success of the market system ? How do property rights encourage cooperation?
If you have $10,000 to start a lawn-cutting business, the interest rate is 6 percent, your annual cost of raw materials are $4,000, and the earnings you sacrifice from working at a
Economists estimate the short run elasticity of demand for a Chipotle burrito is -2.25. i) What degree of elasticity does Chipotle burritos exhibit? ii) A 1% change in
The law requires that the parties be competent to enter into a contract. Give an example of a party who lacks competence.
what is meant by PPF?
Q. What do you mean by Supply of money? Supply of money The supply of money is an exogenous variable in the IS-LM model Money supply is enti
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