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"The current account depends upon income and the real exchange rate. If income rises,consumption of imports is high and the current account worsens. Thus, if monetary policy is the only tool that authorities can respond with quickly, a worsening of the current account due to a rise in income (for example, because of a temporary tax cut) requires a monetary contraction to moderate the rise in income and stop the deterioration of the current account." (a) Use the DD-AA diagram to analyze the effects of a temporary tax cut on income and the current account. (b) Do you find that the CA worsens and that income rises, as suggested in the comment? (c) Now consider a monetary contraction. Use the AA-DD diagram to show its effects on income and the current account. (d) Does this monetary policy response moderate the rise in income? Does it reverse the deterioration of the CA?
The Gap pursues a segmented market strategy with three main tiers of retail clothing stores: Gap, Banana Republic, and Old Navy. Is this strategy enhancing the competitive positioning of the parent company Is it increasing the cost and lowering th..
What do economists believe is the relationship between the price level (P) and real output (Y) in the short run and in the long run, and how does this answer differ depending on which time frame is being considered How are these beliefs reflected ..
Assume that the demand curve for apples is given by Qd = 140 - 5P, where Qd is number of pounds demanded per year and p is the price per pound. The supply of apples can be described by Qs = 40 + 3P, where Qs is the number of pounds provided.
assume that demand for product a can be expressed as qa 500 - pa 3pb and demand for product b can be expressed as qb
What is the structure for a firm with at least some ability to determine price? How are price and output levels determined rationally? Since price can, at least to some degree, be determined by the seller, is this firm sure to enjoy profits?
You and your rival must simultaneously decide what price to advertise in the weekly newspaper. If you each charge a low price, you each earn zero profits. If you each charge a high price, you each earn profits of $3.
quotas - quantitative problems1. in the u.s. daily supply and demand for a particular good are given by the equationsqs
Preserved in an economically efficient scenario?
Describe why marginal analysis must be used in decision making with examples. Also, give examples of poor decision-making when sunk costs were used to justify choices, and discuss how legal and ethical issues may play a role in making decisions.
assume that the potato chip industry in the northwest in 2007 was competitively structured and in long-run competitive
for each of the following explain whether it shifts the short-run aggregate supply curve the long-run aggregate supply
What is forgone when decisions are made?
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