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Suppose that consumption schedule for a private open economy is such that consumption C=50+0.8Y. Suppose further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig=30 and Xn=10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures = C + Ig + Xn.
a. Calculate the equilibrium level of income or real GDP for this economy.
b. What happens to equilibrium Y if Ig changes to 10? What does this outcome reveal about the size of the multiplier?
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After a nation's (not USA) foreign-capital flows are frozen, a large international supply of USD dollars shows up. What happens to the quantity of USD dollars demanded.
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Illustrate what happens to the demand curve and the supply curve when any of these determinants change.
Assume that there are two power generating plants that emit SO 2 (sulphur dioxide). In the absence of regulation they each emit 10 tons of pollution per month.
Elucidate how do Keynesian and Real Business Cycle economists differ on the right response to Japanese stagnation.
Suppose you own a home remodelling company. You are currently earning short-run profits. The home remodelling industry is an increasing-cost industry. In the long run, what do you expect will happen to
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