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Foreign aid: Consider a Solow economy that begins with a capital stock equal to $300 billion, and suppose its steady-state level of capital is $500 billion. To its pleasant surprise, the economy receives a generous gift of foreign aid in the form of $100 billion worth of capital (electric power plants, machine tools, etc.).
(a) Use the Solow diagram, other graphs, and the mathematics of the Solow model to explain what happens to the economy, both immediately and over time. By what proportion does consumption per person initially increase? What happens to consumption in the long run?
(b) Suppose instead of starting below its steady state, the economy begins in steady state, with a capital stock equal to $500 billion. Answer part (a) for this case.
(c) Summarize what this exercise teaches you about the possible consequences of foreign aid. In this example, does foreign aid exert a long-run effect on the welfare of poor countries? What is the benefit of foreign aid?
Suppose that the demand curve for seats at the denver minor league baseball stadium is given as Qd = 6,000 – 200p. How many fans would attend a game if tickets were free and there was no limit on the number of fans permitted in the stadium?
illustrate what is the profit maximizing quantity that should be offered to Group B
The Chinese renminbi
People may appear to use rules of? thumb, as suggested by the assumption of bounded? rationality, even though they may really be behaving in a manner suggested by the rationality assumption if .....
ohn also Jeremy are utilitarian's. John believes to labor supply is highly elastic while Jeremy believes to labor supply is quite inelastic.
Evaluate the influences of intellectual predictors of the following economic theorists: Adam Smith, David Ricardo, also Karl Marx.
A profit-maximizing firm should continue to increase production of a good until:
"Since the statistical discrepancy in the U.S. balance-of-payment accounts is so large, we cannot rely on the U.S. BOP statement to give information on the size of various 'balances' with any precision. Perhaps the U.S. BOP statement is essentially u..
Economic efficiency is one of the underpinnings of the arguments for a market economy. What does economic efficiency mean? Illustrate with supply and demand curves a point where a market is operating efficiently.
Which of the following is an obstacle to economic growth? According to the text, as compared to rich countries, most of the poor countries do not fare well because:
Copiers cost about twice as much as workers. Would you recommend they hire another employee or buy another copier?
What are the various stages of the product cycle? What does the product cycle model tell us about international trade and technology?
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