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a. Draw the aggregate supply and aggregate demand model to show the initial long run equilibrium in the real output market. Label the equilibrium point A. Now suppose that a recession happened in U.S. Show the impact of this on Canadian economy in the short run. Label the new short run equilibrium point B. Give a clear explanation about the change in quantity of output produced (use sticky wage explanation)
b. Following from a), show and explain clearly how the economy will reach the long run equilibrium when there is no policy involvement and the economy has to return back to natural level of output on its own. Call the new equilibrium point C. What happens to the price level and output?
c. Redraw the diagram from part a). Now suppose that the government wants to use the fiscal policy to bring the economy back to the natural level. What should it do to bring the economy back? What happens to the price level and the output in this case? How the long run equilibrium is different from part b)? What is the benefit of using the policy?
The Home country is a small open economy with perfect financial capital mobility and no risk premium. Suppose the newly elected Prime
Elucidate the difference between the law of demand and the law of supply. What does the phrase 'other things equal" mean? Why do we need that.
This release also states that the Federal Reserve is in process of purchasing 1.25 trillion of agency mortgage-backed securities and about $175 billion.
What was the impact on the supply of the product and the impact on the demand for the product? Explain the impact on the price of the product and your decision on whether or not to buy the product
Flavortech Corporation expects EBIT of $2,000,000 for the current year. The firm's capital structure consists of 40% debt and 60% equity, and its marginal tax rate is 40%.
Describe some of the investments made on the basis of cheap oil that complicates the transition away from a hydrocarbon based society.
Public Affairs 854 - Midterm 2 Exam. Suppose the money supply in the US rises exogenously relative to that in the euro area. What will happen to the nominal dollar/euro exchange rate immediately, and over time, if prices are perfectly flexible? Wha..
Suppose that a firm’s only viable input is labor. The firm increases the number of employees from four to five, thereby causing weekly output to rise by two units and total costs to increase from $3,000 per week to $3,300 per week.
Assume that the array A[1..n] only has numbers from {1,...,n2} but that at most loglogn ofthese numbers ever appear. Devise an algorithm that sorts A in substantially less than O (nlogn).
You work as an analyst at an investment bank. The CEO of the firm just came back from the Annual Policy Symposium at Jackson Hole. He tells you that he listened to the presentation by Professor Robert Hall, who chairs the National Bureau of Econom..
If average total cost is declining, then: A. marginal cost must be greater than average total cost. B. the average fixed cost curve must lie above the average variable cost curve. C. marginal cost must be less than average total cost.
Identifying Use a graphic organizer like the one below to identify the tools of demand-side policies.
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