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Using the same simple macro model we developed in Module 2:
a. Show what will happen to national income (GDP) if the administration implements another $100 (billion) stimulus spending package.
b. Show what would happen if instead of a government spending package, the administration implemented a $100 tax cut.
c. From your results, find the numerical values of the derivatives dY/dG and dY/dT. (Hint: Numerically, dY is just the new value of Y less the old value and dG is the new value of government spending less the old one. Find the ratios of those numbers and you have found the value of the derivative.) Which policy has the largest effect and why?
Q. Relation between average cost and marginal cost? Relationship between MC and AC are the following: If MC is below AC then AC should be falling. This is because, if MC
Problem : (a) Describe inflation and discuss its origin using Classical and Keynesian theories. (b) Describe with diagram how can inflation occur in an economy with substant
explain williamsons model of managerial discretion?
Problem 1: Using relevant examples, discuss the pricing strategies that firms can use to capture value from their customers. Problem 2: You are a manager in a perfectl
A cost-push inflation have as a result of workers' attempts to push up their wages. Thus, inflation does not have to be monetary phenomenon." Is this statement true, false, or unce
Suppose that the government is the only provider of water. The market demand function reads D: Q(P) = 50 - 2P. The government''s total cost for producing water are described as fol
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THE IMPACT OF INFLATION Inflation has different effects on different economic activities on both micro and macro levels. Some of these problems are considered below: i.
How we can measure Elasticity of demand Though a manager requires an exact measure of this relationship for appropriate business decisions. Elasticity of demand is a measure t
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