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Suppose that consumption spending accounts for about 60 percent of GDP on average, while investement and government purchases each account for 20 percent of GDP on average. (Assume that this country has no foreign trade, so exports and imports are zero). Suppose that in 2018, consumption falls by 2 percent, investements rises by 20 percent, and government purchases fall by 5 percent. What will happen to real GDP in 2018, and what are the contributions of consumption, investment and government purchases to the growth in real GDP?
What is the point, based on the Equimarginal Rule, which has equal marginal benefit (or the closest) for the two purchases?
Chris chooses between two goods, X and Y (see figure below). At first, the price of X is low and the price of Y is high (budget line B1). Chris tells you his best affordable combination of X and Y is at point A. Then the price of X rises, while the p..
Occasionally, companies will use media contrary to normal industry practice. For example, a B-to-B product might be advertised on network TV and a frequently purchased product would use no TV advertising. Discuss about the conditions under which this..
Assume that you are the newly appointed head of the NCAA. Construct a framework for a new scholarship program that would entirely replace the existing system. Describe what should be its tenets if
After wearing seat belts became malsoatory, drivers reacted by driving faster also less carefully. This is consistent with Illustrate what Principle of Economics.
Consider and economy with the following production technology: Y = 9K^1/3 L^2/3 , where the aggregate capital stock is K=100, and aggregate labor is L=100. The price of output is 1. Compute the equilibrium wage and capital return. Compute total payme..
If the par value of the common stock is 5 dollars and is sold at market for 10 dollars does the company get the extra $5? Also how is the company affected by the market value going up and down?
Explain how the government can stimulate the aggregate supply. What are the implications of using this stimulus to help stabilize an economy?
How does the concept of sentience impact moral reasoning about the rights of the animals? In response define sentience and give at least three examples of how this compact impacts ethical decisions about animals.
Consider the AD/AS model of the economy built from the IS/LM, and assume that the SRAS is upward sloping. The economy is currently operating at the full employment level of output. What are the short-run effects of the decrease in the MPC? What are ..
The classic example of opportunity cost is the costs of going to college. Illustrate the implicit opportunity cost of foregone income as well as tuition, books, etc. Think about whether room and board should be considered a cost of college. Calculate..
Given the data below, use PRESENT WORTH ANALYSIS at a 15% interest rate to decide if method A or method B should be used. Method A: Initial capital cost of $100,000. Operating cost of $20,000 per year. Salvage value after 3 years is $20,000.
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