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Now let us use the results of Proposition 15.12 to revisit the discussion of the unemployment experiences of continental European economies provided in Blanchard (1997). Consider the model of Section 15.6. Discuss how a wage push, in the form of a wage floor above the market clearing level, first causes unemployment and then, if σ
Proposition 15.12
Consider the baseline model of directed technological change with the two factors corresponding to labor and capital. Suppose that the innovation possibilities frontier is given by the knowledge spillovers specification with extreme state dependence, that is, δ = 1, and that capital accumulates according to (15.45). Then there exists a unique BGP allocation in which there is only labor-augmenting technological change, the interest rate is constant and consumption and output grow at constant rates.
In an attempt to increase revenues and profits, a firm is considering a 4 percent increase in price and an 11 percent increase in advertising. If the price elasticity of demand is 1.5 and the advertising elasticity of demand is +0.6,
Estimate simple linear regression models for both the raw data and the logs, estimating both the intercept and the slope.
How much must you deposit in your retirement account each year for 10 years starting now (i.e., years 0 through 9) if you want to be able to withdraw $50,000 per year forever beginning 30 years from now Assume the account earns interest at 10% per..
Nominal GDP uses current prices as a measure of the value of goods and services produced, while real GDP uses prices of goods and services in a base year to measure value. Suppose an economy consists of three goods: pizza, sodas, and televisions.
Suppose a competitive market consists of identical firms with a constant long-run marginal cost of $10. There are no fixed costs in the short run or long run. Suppose the demand curve is given by Q(P) = 1000-p
Suppose the following equations are true: Production Function: Q = K1/3L2/3, which means MPK = 1/3K-2/3L2/3,MPL = 2/3K1/3L-1/3 MRTS = 2(K/L) Total Cost = rK + wL r = .2 w = $5
the marginal product of labor measured in units of output for a firm ismpn a100 - nwhere a measures productivity and n
Does the language raise any issues related to macro prudential regulation of financial institutions?
20 economists were sampled and asked to predict if the national economy would improve during the next twelve months. Eleven of the economists predicted an increase, two economists predicted no change, and seven economists predicted.
Consider two goods, Gorillas (G) and Chimpanzees (C). Your utility function for gorillas and chimpanzees is given by U(G,C)=ln(G)+C. Gorillas cost $10 each, and Chimpanzees cost $4 each. You currently have $200 to spend.
Compute the profit-maximizing price and output combination.
Compare and contrast the simple (deer and beaver) and complex (Glasgow factories) versions of Adam Smith's theory of value.
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