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Setting Fiscal policy
Using what you have learned in this unit, choose a FISCAL policy that you would recommend to help an economy that is in a recession. You should not choose a monetary policy (i.e. interest rate manipulation, selling of bonds, or printing of money).
Explain how your policy would help increase aggregate demand. That is, does it increase C, I, G, or X?
Explain what would happen to prices (i.e. inflation).
You may use either the Modern Keynesian model or the Classical Model to conduct your analysis. Just be sure to note which one you are using.
At the end of 2002, the (1-year) interest rate was 1% in the U.S., and 26% in Argentina. Recall that at the same time, the spot rate for the Argentine currency was Peso 4.00/$.
Draw a graph describing the demand and supply curves before and after the tax. describe graphically the tax revenue and how it is shared between the consumers and suppliers (producers) of gasoline.
The supply curve for labor is S L = 100W, where W is the market wage. The marginal revenue product curve for the firm is D L = -50W + 450.
The Wozniak Corporation, a maker of aircraft engines, determines that in 2008 the demand curve for its product is as follows-What is the price elasticity of demand if price equals $500?
What is the profit-maximizing price to charge a Texan for a car wash? What is the profit-maximizing price to charge a Californian for a car wash?
Using a supply and demand graph, make one shift of wither the supply or demand curve to illustrate the likely result of this action.
If the desired fiscal stimulus is $20 billion and the desired AD increase is $50 billion, we can conclude that the MPC is:
Fiscal policy refers to the use of government expenditures or tax policy to influence the aggregate demand for a specific purpose.
Dell Electronics just stumbled upon a new supplier of personal computer (PC) circuitry in Costa Rica that can supply standardized computer inputs at $70 per PC.
A monopolist faces demand curve p = 11-Q , where Q is measured in thousands of units. Compute the firm's degree of monopoly power using the Lerner index?
Suppose a frost kills a large portion of an orange crop, with a resulting higher price of oranges. It has been said that such an increase in price benefits no one since it cannot elicit a supply response; the higher price, it is said, simply "line..
Engineers at national research laboratory built a prototype automobile which could be driven 180 miles on single gallon of unleaded gasoline. They estimated that in the mass production the care would cost 40k for each unit to build.
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