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You need both equations and clearly labeled graphs (separate graphs for each question) to answer the following questions. Assume that b=1/2 and that initially the real interest rate is equal to the marginal product of capital at 3%. As well, assume that v=2 and that the inflation rate last period was 2%. Assume the natural rate of unemployment is 5.5%.
a. The Sequester is probably a bad idea. Use the IS-MP model we developed in class to explain what should happen to the economy if the government cuts spending by 1 percentage point of potential GDP.
b. How much can we expect this to increase the unemployment rate? (no need for a graph)
c. How much will this change inflation? What will the inflation rate be in the period of the cuts?
d. What was the nominal interest rate last period (before the cuts) if the real rate was equal to the marginal product of capital.
e. What happens to the real rate of interest this period (after the cuts) if the Federal Reserve does nothing to change the nominal rate. What will this do to the economy? Remember that the government has cut spending in question 2a.
f. What does the Federal Reserve have to change the nominal interest rate to in order to close the output gap?
Over the last decade, several firms have entered this industry and, as a consequence, Forey is earning a return on investment that roughly equals the interest rate.which market structure best characterizes the industry
suppose a worker is offered a wage of 5 per hour plus a fixed payment of 40. what is the equation for the worker
q.hiro nakamura is ceo of the cola king bottling company a small regional producer operating in the pacific northwest.
What is the current minimum wage in IL and based on research what possible implications would an increase in the minimum wage post to the state of IL? Based on research and critical analysis what is the root cause of the great minimum wage increase d..
You observe a positive relationship between price that your store charges for CDs and total revenue from CDs. Is demand for your CDs elastic or inelastic.
Education (e.g., elementary and secondary education, higher education-undergraduate and graduate) b. Government (e.g., the Social Security Office, the Internal Revenue Service)
Find the output levels where total product and average product are maximized. What is marginal product when total product is zero?
If the cost of producing Einstein's Bagels is constant at $0.10 per bagel, should they reduce price and thereafter, sell more bagels (assume profit maximization is the company's goal)?
The graph also shows the marginal revenue curve faced by this firm. Hypothetical cost and revenue curves for a computer producer. Explain how many computers will the monopolist sell to maximize profits.
When the work was complete, Chuckrow paid Gough the original contract price but refutilized to pay him for the additional cost of reerecting the trusses.
Why is it important to know Elucidate how much output is being produced
Suppose that, initially, the Michigan economy is in equilibrium with no unemployment. The supply of workers is ES = -1,000,000 + 200w, and the demand for workers is ED = 16,500,000 – 300w, where w = annual wages, and E = number of employed workers.
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