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1. The aggregate demand curve portrays the relationship between price level and real GDP. What are the three reasons this relationship is a negative or inverse relationship? Provide brief illustrations of each.
2. What role do imports play in aggregate demand? Under which conditions will changes in imports expand aggregate demand? Reduce aggregate demand?
3. Shifts in the Aggregate Supply Curves List and discuss the things that will make the Short Run Aggregate Supply curve shift to the left or to the right. Illustrate. List and discuss the things that will make the Long Run Aggregate Supply curve shift to the left or to the right. Illustrate.
4. What is the natural level of output?
Pick any public company and discuss which 2 or 3 macroeconomic indicators which would most profoundly affect that business and why.
Assume an economy where there are two producers: a wheat producer and a bread producer. In a given year, the wheat producer grows 30 million bushels of wheat of which 25 million bushels are sold to the bread producer at $ 3 per bushel, and 5 million ..
You are in a meeting to discuss two possible acquisitions. The discussion of one results in considerable debate. One group presents credible arguments that the purchase encompasses the possibility of significantly larger profits after the acquisition..
Find the optimal crude oil allocation for the following example if the profit associated with square foot of fiber is cut to $0.375,
Where Q is the number of cuts per week and P is the price of a hair cut. Terry is considering raising her price above the current price of $15. Terry is unwilling to raise price if the price hike will cause revenues to fall. Should Terry raise the pr..
The economy has recently turned around, and one of your colleagues suggests that you could hire 25 people for $50,000 per employee to do the sales job as independent agents at a cost of goods sold (COGS) of only 0.5%. What concerns might you have abo..
What is the dollar value of the deadweight loss when output level Q2 is being produced? What is the total surplus when output level Q2 is being produced?
Cutter Company makes and sells table saw, which are designed to be safe if used properly. Erin buys a Cutter saw and lends it to her neighbot Frank. To reach a toolbox on a high shelf in his garage, Frank props the saw at an angle against a cabinet a..
If two countries have identical production possibility frontiers, then trade between them is likely to be beneficial if:
The market for paper in a particular region in the United States is characterized by the following demand and supply curves: Calculate the output and price of paper if it is produced under competitive con- ditions and no attempt is made to monitor or..
Discuss the role of the FOMC and the three major policies it implements to help regulate banks. Briefly describe the equation used to measure bank reserves and the definition of the federal funds rate and their role as operating targets of the Federa..
Suppose nominal GDP in 1999 was $100 billion also in 2001 it was $260 billion. Illustrate what is the own-price elasticity of demand.
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