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Two identicial countries Alpha and Beta can be described by the IS-LM model in the short run. The governments of both countries cut taxes by the same amount. The Central Bank of Alpha follows a policy of holding a constant money supply. The Central Bank of Beta follows a policy of holding a constant interest rate. Compare the impact of the ax cut on income and interest rates in the two countries.
Suppose that any money lent by a bank is always deposited in a checkable deposit and that the reserve ratio is 10%. The Fed purchases $100 million in Treasury bills.
Explain why we cannot necessarily conclude that the typical Canadian's welfare has improved by 10-percent over the year.
Given a situation in a monopolistically competitive market, if my price is $10 for an item and at my present rate of output, my marginal cost is $8 per unit
Explain the multiplier intuitively. Why is that an increase in planned investment of $100 raises equilibrium output by more than $100 Why is the effect on equilibrium output finite How do we know that the multiplier is 1/MPS
Supply-side economics, during President Reagan’s administration, involved the supply component of the supply-demand equation. stressing the importance of tax cuts for businesses.or else.
What are two possible fiscal policy solutions for the problem? Using a Keynesian approach, you should be able to get numerical solutions. More points are given for numerical solutions.
Rita has well-behaved preferences over steak and fries. at her current consumption bundle of 3 steaks and 10 fries, her marginal rate of substitution between steak and fries is 1/2 (in absolute value). if you offered to take away one fry and give ..
The fixed cost is zero for both firms. The two firms want to merge. They argue for the merger on the grounds that marginal production costs would fall to 10 for all units of output after the merger since all production woul be at the low marginal ..
A movie theater has estimated that demand for a movie ticket can be written as P1=10-Q1 for senior citizens and P2 = 12 - Q2 for rest of the consumers.
Television channel operating profits vary from as high as 45 to 55 percent at MTV and Nickelodeon down to 12 to 18 percent at NBC and ABC. Provide a Porter Five Forces analysis of each type of network. Why is MTV so profitable relative to the majo..
Illustrate what are the most important concepts you can learn in Economic Theory classes. How can you apply them to your life. What difference can these concepts make in your everyday life.
Use Okun's law to determine the size of the GDP gap in percentage-point terms. If the potential GDP is $500 billion in that year, how much output is being forgone because of cyclical unemployment?
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