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The Canadian government cuts spending by $1 billion using both words & diagrams, fully explain how this will affect the Canadian economy. a.) If Canada is a closed economy. b.)If the Canada is an open economy.
Now suppose the factory develops an innovation that allows it to produce a shirt for the equivalent of 1 loaf of bread. What is the new radius of the factory's market area.
Air Express bought a used Boeing 757 plane 5 years ago for $35,000,000. At the time the plane was bought, it was estimated that it would have a service life of 10 years and its salvage value at the end of its service life would be $10,000,000. Air Ex..
Critics of federal banking policy argue that deposit insurance is a key reason for banking failures. The banks enjoy a "heads I win, tails the government loses" proposition. Several possible reforms of deposit insurance have been suggested. For examp..
If a firm in the industry wishes to increase total sales revenue (ignoring cost considerations), will it raise or lower its selling price? Why? What happens to the demand for beer if the price of soda falls by 2%? Explain your answer. What happens to..
Consider a firm for which production depends on two normal inputs, labor and capital, that are not perfect complements. Initially the firm faces market prices of w = 10 and r = 8, for labor and capital. These prices then shift to w=7 andr=7. In which..
According to Keynesian theory when should expansionary fiscal policy be used? How does this change GDP, unemployment and the price level?
How is purchasing power parity calculated and why is it superior to the exchange rate in making comparisons between per capita income levels in different countries. Why is the international US dollar used in making comparisons? How did Maddison estim..
Suppose two firms sell an homogeneous product; they compete in prices. Their respective marginal costs are MC1(q) = 10 and MC2(q) = 20. Find the prices that form an equilibrium (for simplicity and reality, assume that prices are quoted in units no sm..
Consider an economy that begins with output equal to its natural level. Suppose the economy experiences a negative shock to the banking system. (a) Use the AD-AS and IS-LM models to show the effects of the shock on the AD, AS, IS, and LM curves.
Assume a per-unit tax of $2.00 is levied on the producers of Gadgets. Illustrate what is the after-tax market equilibrium price and quantity.
Suppose your mayor has asked you to come up with an excise tax that will be as efficient as possible. Choose a good to be taxed and explain why it will cause a low deadweight loss.
Suppose a market is in equilibrium. Then a change occurs and the equilibrium price decreases while the equilibrium quantity increases. What change occurred in the market to cause these changes to price and quantity?
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