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5. In this question you should assume that the Marginal Propensity to Consume out of permanent income is one [i.e., no bequest motive + perfect consumption smoothing: c1, = c2 = c
Suppose an advertising agency is conducting a survey concerning the effectiveness of commercials during the Super Bowl. If 32% of people watch the Super Bowl, and if the agency con
define business cycle
Gross domestic product Definition Perhaps the most significant concept in macroeconomics is Gross Domestic Product (GDP): Gross Domestic Product (GDP) is defined as the
With the aid of a diagram explain the Philip''s curve
Question 1: Consider a two-period, two-person pure exchange economy. Utility functions and endowments are given as follows. u1(x0; x1) = (x0x1)2 and e1 = (18; 4) u2(x0; x1) = ln x0
Suppose that the government wishes to decrease the market equilibrium monthly rent by increasing the supply of housing. Assuming that demand remains unchanged, by how many units of
Question 1: Critically analyse the costs of inflation. Which of these items is likely to have encouraged many governments in their adoption of inflation as public enemy number
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
Suppose the price of Twinkies decreases from $1.45 to $1.25 and, as a result, the quantity of Twinkies demanded increases from 2,000 to 2,200. Using the midpoint method, the price
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