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Explain how the Central Bank can set the nominal interest rate in the money market. In addition, explain how it can use expansionary monetary policy to boost GDP if the economy is in a recession. Be clear about the policy tools the Bank can use, how they operate, and the channels through which they influence GDP. Briefly discuss what factors determine the effectiveness of such a policy (think about our current recession and interest rate in the US!) Use an AS/AD diagram in your answer.
The airline has an average of 40 passengers paying an average of $200 for this flight. Do you think the airline should be flying between the two cities? Evaluate from a short-run and long-run perspective.
What happens to the equilibrium price and quantity in each market? Which product experiences a larger change in quantity? Which product experiences a larger change in price?
What is the expenditure multiplier-explain this briefly? What does it multiply? When an economy is in equilibrium what the size of unplanned inventories is?
Pam, having recently graduated from college, is looking to work for 2 years before she enters graduate school. She has received 2 job offers with the following salary structures:
What are some of the positive externalities of education? Why may higher education offer fewer positive externalities than primary or secondary education?
Use the firm's isoquant-isocost diagram and the firm's marginal cost curve to explain and illustrate the output and substitution effects of a decrease in the price of labor.
A firm uses two inputs, unskilled labor (L) and capital (K) to produce its product. The wage rate for one unit of labor is $5, while units of capital cost $20.
Discuss the advantages and/or disadvantages of distributing marketable pesticide permits to each farm operating in the watershed equal to 40% of its current level of use of that pesticide, versus simply ordering each farm to reduce pesticide use t..
Suppose, in a given week, float raises $900 million, Treasury deposits at the Fed rise $1500 million, discounts and advances decline $200 million, and foreign deposits at the Fed increase $150 million.
Consider a product with a supply function Q 1 = β 0 + β 1 + u 1, a demand function Q d i =y 0 +u i d . Show that P i and u s d are correlated.
What elasticity of demand did the Village Administrator seem to assume here in his prediction for 1970- 1971? Compute the approximate elasticity of demand (round off, two decimal places is close enough).
Assume that a price support system for cotton requires the federal government to pay farmers $3,000 for each acre to not plant cotton. How would you shift either the supply or demand curve for cotton to describe the effect of this action? In your a..
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