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Governments typically provide disability insurance and unemployment insurance to workers. In contrast, governments typically mandate that firms provide workers’ compensation insurance to their workers but do not provide the coverage. Why the difference? Why don’t governments provide workers’ compensation instead of mandating it?
The Fed along with many other central banks in the world has adopted the policy of inflation targeting. Explain what is inflation targeting. What are the advantages and disadvantages of inflation targeting? What is the main difference between Inflati..
Suppose the nominal interest rate is rn and inflation is i. Assume 0
All licensed drivers are required by law to purchase a minimum level of auto and motorcycle insurance (well, if they own either of the two). However, the vast majority choose to buy much more insurance than the required minimum. It’s also true that m..
The consumption function is C = $400 billion + 0.6Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with:
Consider the Romer model. If the percentage of the population engaged in ideas formation (l) (bar) decreases, what are the short and long term impacts of this shift on Y?
Consider a model of Cournot competition as studied in class, with 2 firms and a linear inverse demand function P(Q) = a – Q (where Q = q1 + q2 is the total quantity produced by the two firms and a is a parameter). The firms have different marginal co..
Mackey orders from Pride one thousand cases of Greenie brand peas from lot A at list price to be shipped F.O.B. Pride’s city via Fast Freight Lines. Pride receives the order and immediately sends Mackey an acceptance of the order with a promise to sh..
John has the utility function U = Min{x,y}. The price of x is 1, the price of y is 1, and his income is 50. a) Find John’s optimal bundle. b) Suppose now there is a discount for the first 20 units of x John buys such that px=0.5 for those first 20 un..
Consumer A values good 1 at $4,500 and good 2 at $1,500. Consumer B values good 1 at $5,000 and good 2 at $1,000. Costs are zero. Suppose the monopolist only sold the goods separately. What prices will the monopolist charge for good 2 to maximize rev..
The "interest-only" mortgage typically converts later to a:
If the price of a product decreases, we would expect: "Price" in the statement of the Law of Supply refers to: A decrease in demand and an increase in supply will: When producers (say, of roads) are not able to make all consumers pay for enjoying the..
What conditions are necessary to determine if the purely competitive firm should produce in the short run? State the marginal revenue and marginal cost conditions and the total revenue and total cost conditions. Why is the level of output at which ma..
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