Characterized by scale of economies

Reference no: EM139228

Q1. Assume Australia's unemployment rate began to rise, and the government passed an investment tax credit to help stimulate the economy. Elucidate the effect this policy would have on the nation's real risk-free interest rate, nominal interest rates, real and nominal GDP, gross private domestic investment, unemployment rate, inflation rate, real and nominal exchange rate, current account, financial/capital account and reserves account.

Q2. Let the cost function be C= 100 + 4q+ 4q(2). Derive an expression for average cost. Derive an expression for marginal costs. Is there any range of production characterized by scale of economies? At Illustrate what production level are scale economies exhausted?"

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