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a) Assume an initial macroeconomic equilibrium. Explain both the SR and LR impact of an expansionary AD shock. Use appropriate diagrams and provide a brief real world example of this type of shock.
b) Create another diagram; once again start from an initial macroeconomic equilibrium. Explain both the SR and LR impact of a contractionary AS shock on Y. Use the appropriate diagrams and provide a brief real world example of this type of shock.
Compute the path of the economy, that is , calculate real GDP, the price level, the inflation rate and real money stock for each year until GDP I swithin 1% of the potential. (limit calculated values to 10 decimals points)
For each of the following concepts provide a definition, a complete explanation as to their significance, and a practical example.
Indicate whether each of the following statements is true or false and explain why.
Suppose the domestic appliances industry faces severe foreign competition, and asks you to prepare a position paper its lobbyist.
Analyze the factors that influence the banks desired excess reserve ratio, r e . What would happen to the magnitude of r e if:
Let's say there's a world-wide influenza pandemic. Assume that the marginal cost (supply) of influenza vaccinations is constant at $40. Assume that everyone in society has health insurance that pays 80% of all medical services
Illustrate each of the following events using a demand and supply diagram for bananas.
Explain the impacts of an expansionary fiscal policy such as a tax cut on the levels GDP, Consumption, Investment, interest rate and unemployment and price.
Find the optimal level of inputs L* and K* that minimize the cost of producing Q0. What is the cost of production associated to L* and K*?
Find out the optimal weekly output and price of this firm. Find out the weekly profit from the production and sale of this product.
Problem on standard deviation
Explain how each of the following will affect the relative values of the dollar and the euro:
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