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congratulations! You habe neen appointed an exonomic policy advisor to the united states. You are told that the economy is significantly below its potential output and that the following will happen next year: World income will fall signigicantly and the price of oil will rise significantly. ( the united states is an oil improter.)
a) what will happen to the price level and output? Using the AS/AD model, demonstrate your predictions graphically.
b) what policy might you suggest to the government?
Illustrate what potential conflicts of interest could arise in a management buyout in which the investment bank is also likely to be an investor.
An industry which generates detrimental externalities will have a marginal social cost higher than the marginal private cost to the industry.
Does that face help explain why such governments would rather subsidize an industry’s export sales than its sales in the domestic market?
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If the actual price in this market were below the equilibrium price, what would drive the market toward the equilibrium.
The relative price rule is equivalent to saying the marginal utility per dollar is the same for both goods, or goods should be consumed in the same ra5tion as their relative price.
Suppose that the government is debating whether to spend $100 billion today to address climate change.
Assume Okun's law holds also a one percent (%)age point rise in the unemployment rate reduces real output by 2% of full-employment output. The expectations-augmented Phillips curve.
The opportunity cost of Juan's time is $8 per hour. If Juan receives $2 per pound for his fish, what is the optimal number of hours he should spend fishing.
In some states, mining for coal leaves large amounts of rubble, which poses flooding problems; causes land damage also is unsightly.
Suppose you discover that average fixed costs are $2 and average variable costs are $7. Indicate what the firm should do.
If Starbucks introduces the world to premium blends, and demand rises substantially, illustrate what will happen in this market as it moves to a new equilibrium.
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