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Policymakers around the world often face what Obstfeld and Taylor dubbed a "policy trilemma":
• they want to fix the nominal exchange rate, in order to stabilize the price level;
• they want capital mobility for efficiency and flexibility purposes;
• they want to engage in active monetary policy for output stabilization purposes.
Using the concepts you have learned in class, explain in detail why this is a "trilemma", i.e.
Explain why only two of the three objectives can be achieved at any point in time.
Briefly discuss the similarities and differences between producer equilibrium and consumer equilibrium.
U.S. Airways experienced huge losses for several years in the 1990s, yet it continued to operate its fleets.
Depreciation taken in the third year if the machine is also sold during the third year.
Illustrate what would be the pes0-dollar exchange rate be if purchasing-power parity holds. If a monetary expansion caused all prices in Mexico to double.
Does the law of diminishing marginal returns apply to this firm's production process. If so, explain why and find the quantity of labor at which diminishing marginal returns.
Calculate Marginal Revenue from demand if the marginal propensity to save is 0.05, how large is the multiplier.
Describe the magnitude of crowding-out that results from the above fiscal expansion .Show the transition dynamics that results.
Elucidate which of the subsequent statements is correct regarding the equilibrium cost also quantity of X.
Most macroeconomists believe it is a good thing to taxes act as automatic stabilizers also lower the size of the multiplier.
determine either the demand for student employees by the restaurant would increase, decrease, or remain unchanged.
Can you tell whether this firm is in a competitive industry. If so, can you tell whether the industry is in a long-run equilibrium.
Find the equation of the dominant firm's derived-demand function
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