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True/False - Briefly explain the reason.
a. The utility function U(X1,X2)=X1^a + 2X2^b. Corresponds to preferences for perfect substitutes.
b. All ordinary (non-Giffen) goods are also normal goods. (Hint: Use the Slutsky equation to support your answer)
c. If consumer consumes only two goods, both of them can be inferior.
d. If a consumer is making an optimal choice between two goods, x and y then, independently of his preferences, the MRS = (-PX)/(-PY) condition must always hold.
e. Any Giffen good is an inferior good. (Hint: Use the Slutsky equation to support your answer)
If the required reserve ratio is 0.05 and the Federal Reserve buys $1 billion in treasury securities, the money supply would Increase/decrease(circle one) by $_____________. This would lead to an increase/decrease (circle one) in interest rates.
Suppose the market for cigarettes is characterized by the following information : Suppose the government impose a sales tax of $2 per unit. Calculate the Dead-Weight-Loss due to the sales tax.
Using an aggregate demand and supply diagram, explain how each of the following scenarios affects the equilibrium price level and aggregate output. Consider first the short-run, then the long-run equilibrium for each scenario.
A decrease in the money supply leads to an initial increase but a long-run decrease in the equilibrium interest rate if the _____ effect dominates other effects.
Consider an economy with the usual required reserve ratio (rr); economy-wide checking (demand deposits) of $400,000; total cash within banks of $100,000; cash held by the public of $36,000; and er = 0.16. Calculate the "naive" multiplier. We will use..
If $1,600 was received in January for services performed in January, what was balance in Unearned Service Revenue at December 31, 2000.
q. the article states growth in the export sector has been one factor contributing to overall growth. how would we
Consider a repeated game between a supplier (player 1) and a buyer (player 2). These two parties interact over an in nite number of periods. In each period, player 1 chooses a quality level q ∈ [0, 5] at cost q. Simultaneously, player 2 decides wheth..
Looking at the circular flows model, how can the saving equals investment equation be derived?
Respond to the question and to other students' postings. Consider the following when posting your responses: Why might this be the right form for the new business? What might some of the disadvantages be?
Calculate and graph what happens to T(taxes), C(consumption), AD(aggregate demand), GDP, and Prices if the President raises taxes by 100 billion and the MPC = .80.
Suppose for a moment that someone with legislative power decides to abolish Fractional Reserve Banking and passes a law that forces banks to only lend the money they own, that is M0. What would be the economy-wise implications of such a change in the..
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