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Suppose an economy that is initially at full employment faces a substantial increase in the factor cost of production.
a. Discuss (with the aid of aggregate output market and money market diagrams) the short-run effect on output, unemployment, general price level and interest rate with a substantial increase in the factor cost of production.
b. Discuss (with the aid of an aggregate output market diagram) what kind of monetary policy can be adopted to restore the economy back to full employment equilibrium.
c. Suppose the problem you discussed in part (a) relies on the self adjustment mechanism instead of the discretionary policy proposed in part (b). Examine the possible impact of minimum wage on the self-adjustment mechanism.
A consulting company estimated market demand and supply in a perfectly competitive industry and obtained the following results.
Explain why each stakeholder group identified in question 1 is in favour of, or opposed to, SunCal's plans to build condominiums in the resort district and identify possible solutions to this dispute that might emerge if SunCal was to work collabo..
Ann Page Corporation has fixed expenses of $30,000 per year. Variable expenses per unit are $17. Sales price per unit is $30.
In the foreign exchange market, if the interest rate on foreign deposits increases, holding everything else constant,
q1. suppose china produces both agricultural and capital goods. draw and show the change in the ppf when an outbreak of
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What is the impact of a tax cut in an economy operating under a fixed exchange rate regime on household spending, interest rates.
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This exercise presents a simple example to elucidate how exchange-rate conversions can produce misleading results and how the PPP methodology works.
Illustrate how do you think this would affect household spending on goods and services.
Illustrate what impact might such a reduction in purchases of U.S. treasury securities have on the cost of short- also long-term financing.
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