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In the long-run framework, budget surpluses: A. should be run on a permanent basis since they boost saving and investment and stimulate economic growth. B. should be run whenever output dips below potential output. C. should never be run since they crowd out investment in the short run. D. are better than budget deficits over the long run because unlike budget deficits, they increase saving and investment.
Overnight target rates and inflation One of the major targets of every central bank is a low and stable inflation. Its main control variable is the overnight interest rate tar
Let a macroeconomic model be of the following form: C = a + bY D a = 10 T = T 0 b = 4/5 G = G 0
Suppose you are the production manager for Widgets, Inc. Your job is to produce a fixed amount of output at the lowest cost possible. When you take over the position, you find that
Only two identical firms i = A;B, each with marginal cost MCi = 40 and no fixed cost, operate in a market with demand: Q p 1 160 2 120 3 90 4 70
Q. Define market for overnight loans? The market for overnight loans Overnight interest rates are rates for loans over a single night - these are the shortest of all inte
Some manufacturing and agricultural products produced in the Midwest are exported to overseas markets. US consumers and businesses also purchase many products produced outside the
A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre
Question 1: The common characteristics of LDCs include low GDP per capita, capital scarcity, high unemployment, chronic budget deficit, high levels of external debt, hig
Sustainability of Current Account Deficit: Theoretically speaking, a current account deficit can be sustained as long as the growth rate of national income exceeds the rate of
Q. Characteristics of endogenous growth theory? There are many different explanations for technological progress. Most of them, though, have many common characteristics:
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