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[Calculating the multiplier effect] Using data from the Federal Reserve Bank of St. Louis (FRED) (research.stlouisfed.org/fred2/), analyze the effect of a decline in exports on GDP.
a. Download data since 1990 on Real Exports of Goods and Services (EXPGSC1).
b. What was the dollar value of the decline in real exports between the second quarter of 2008 and the first quarter of 2009? If the multiplier is 2, holding everything else constant, what was the effect of this decline in exports on real GDP?
Let Q= Lα Kβ. suppose the firm seeks to produce a given output while minimizing its total input cost. TC=Pι L + P κK. Show that the optimal quantities of labor and capital satisfy L/K=(α/β) (Pκ/Pι). Provide an intuitive explanation for this res..
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