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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?
The monetary system in any economy facilitates trade and allows people to trade more efficiently, as compared to a barter economy. In the United States, the monetary authority is t
Each day millions of Americans purchase millions of goods and services. These goods and services are generally readily available, as long as you have the necessary money to purchas
In the view of above complications, there is a long-standing debate on whether the fiscal policy should be active or passive in nature. Note that in the Keynesian context; even a p
Differentiate between Nominal rate and real interest rates To distinguish the real interest rate from the "normal" interest rate, the latter is called the nominal interest rate
Q. Describe about Components of GDP? By considering all arrows to and from the goods market we see that Y + I m = C + I + G + X. Left hand side is the value of all finishe
Suppose that Lilistan has two types of citizens: low-income citizens (income = $20,000) and high-income citizens (income = $80,000). Interest income is currently taxed and each typ
Assume a market with demand Q = 16p^(--2) that is supplied by a monopoly with costs C(Q) = 6 + Q2/8. 1. Calculate the equilibrium price, output and monopoly profits. 2. What
Introduce about the open-economy macroeconomics shortly. The Open Economy: a. One of the major concerns introduced through open-economy macroeconomics is the exchange rat
Why do we still have problem of "unemployment" ? How could we solve the problem? Which one is better fixed or flexible exchange rate of unemployment ?
What does the United States do better than other countries?
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