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Instructions For the following 10 questions, consider an economy which is initially in equilibrium without a tax, with P* of $90 and Q* of 10. Later, a tax is put on the market
Importance of macroeconomics models Using the models we can, for example, analyze what happens when the government increases consumption, when the central bank increases the tar
what is okun''s law ? In economics study, Okun's law also named after Arthur Melvin Okun is an empirically observed relationship relating among unemployment to losses in a specific
An electrical company audit indicates that motor consumption is 4x106 kWh per year. By upgrading to high efficiency motors a 10% savings can be made. The additional cost for the mo
A significant argument for the augmentation has to do with concept of money illusion. Money illusion means that you care about nominal rather than real amounts. Imagine that your s
When investment banks underwrite IPOs, they are typically sell stock for 5-10 percent more than they pay for it. When they underwrite stock for companies that are already public, t
Aggregate Demand Policies Both fiscal and monetary policy changes shift the AD curve. Let us see how, starting with a fiscal expansion. See figure 6.2. In the upper panel, the
ORDINAL THEORY: INDIFFERENCE CURVE APPROACH In indifference curve approach consumer is assumed to be rational, so that consumer's objective is to maximise her utility by choos
What are the potential disadvantages of growth? The potential disadvantages of growth are as follows: • Raised pollution, • Depletion of non renewable natural resources
Describe the relation of money with wealth and income It is very possible to have a high income but no money and no wealth, or to be very wealthy and have a lot of money but no
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