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The Recession of 1990-91 The story of the 1990-91recession begins in mid-1990, when Iraq invaded Kuwait, a major oil producer. During this conflict, Kuwait’s oil was taken off the world market, and so was Iraq’s. The reduction in oil supplies resulted in a rapid and substantial increase in the price of oil, a key input for many industries. From the second to the fourth quarter of 1990, oil prices rose from $14 to $27 per barrel. a. Make an assumption that in year 1990, the U.S economy was initially in long-run equilibrium b. Use simple AD –AS graph, illustrate and explain verbally how the U.S. economy moved in recession of 1990-91. c. Indicate potential output(Y*) actual output (Y), price level (PL). What type of unemployment was present? d. What was so specific about the recession of 1990-91? Explain e. If the economy is self-correcting (no action form government), what forces would bring the economy back to the full employment level of Real GDP? Explain verbally and illustrate graphically f. If monetary policy is used to eliminate the economy problem in 1990-91, explain what type of monetary policy will be an appropriate to cure the economy. g. Is there any dilemma the Fed might face in the case of 1990-1991 recession while choosing the appropriate monetary policy?
Assume an endogenous growth model with labour augmenting technology.
However, during nonwinter months tourism drops dramatically and travelers have no problem securing rental car reservations. Determine the optimal pricing strategy, and explain why it is the best pricing strategy.
Variable costs are costs that _______ in total, but ________ as the business activity level changes: A. change; remain constant per unit B. change; change per unit C. remain constant; remain constant per unit D. remain constant; change per unit
Discuss the following statement: In the real world there is no industry which conforms precisely to the economist’s model of perfect competition. This means that the model is of little practical value’. Illustrate with a diagram and explain the short..
What is the probability that it will take a worker between 6 and 10 minutes to complete the task
What determines price elasticity of demand for a product. key determinants of price elasticity of demand are as follows: i. Availability of close substitutes- gas stations across street, very elastic.
Which of the following factors are typically omitted from the quantitative analysis of wages but can help explain otherwise unaccounted for disparities?
In 2013 the south Korea GDP was about 1620 billion. Since we are working in 2013 dollars, this number is both the real and the nominal GDP for 2013. From 2013 to 2014 the real gdp grew 2.9%. The money supply in Korea in 2014 was about 390 billon. The..
In 2012, WVU president James Clements’ base salary was $775,000. The head football coach, Dana Holgorsen’s base salary was approximately $2.4 million. Why is the football coach paid so much more than the president? Should the head football coach be p..
Say a consumer is choosing between red wine and white wine. The price of red wine is 20 and the price of white wine is 10. If the marginal rate of substitution is 1, and if red wine is on the horizontal axis then the consumer is purchasing:
q. assume always there wireless serves 100 high-high demand as well as wireless consumers each of whose monthly demand
What are politicians more likely to prefer: expansionary fiscal policy or contractionary fiscal policy? Does your answer suggest a difficulty for implementing a consistent counter cyclical fiscal policy?
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