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An economic model consists of a defined set of variables and the relationships that exist among the variables. The purpose of the model is to explain some aspect of the observed economy. Assume that the standard symbols used to identify your variables are understood as well as the meaning of the relationships to which you make reference; i.e., were you to write I = I(r), it will be understood without need for further verbal explanation.
Assume that the economy is hit by a (non-permanent) productivity/supply shock(e.g., another oil crisis) as well as a decline in optimism affecting both consumption and investment. Verbally and graphically explain the implications of the indicated shocks. In your discussion, contrast and compare the possible responses to the situation. If you were King/Queen, indicate the policy responses that you would decree.
You are not allowed to consult any person or use any source, e.g., the internet, other than those specifically indicated.
Five to eight pages.
Times New Roman, Double Space.
Why does Walmart need to be concerned about exchange rates? How can the company use the tools manage their exposure to currency risk?
Discuss its implications and assess its importance for macroeconomic policy.
Verify that regardless of the value of Y , Qm = QC . What does this mean about the ability to identify market power if marginal costs are unobservable? Why?
What is the law of diminishing returns? Can you provide an example of when diminishing returns have set in (could set in) at a work place?
After Iraq invaded Kuwait gasoline prices rose dramatically – up to 50%. These were many effects of the increased price of gasoline.
Draw a graph and analyse what would happen to the domestic supply of rice and supply curve, consumer price of rice and domestic demand for rice, and cost of rice production. Calculate the actual values of change in consumer surplus, producer surpl..
Farmer Brown grows peaches. The average total cost and marginal cost of growing peaches for an individual farmer are illustrated in the graph to the right.
Plot the relation between output per worker and capital per worker. Does it have the same general shape as the re- lation in Figure 10-4? Explain.
Graph the museum's average total cost curve and its marginal-cost curve. What kind of market would describe the museum?
You've been hired by an unprofitable firm to determine whether it should shut down its unprofitable operation. Help the management of the firm as to whether or not it should continue to operate at a loss?
At times, people will suggest that the Fed should try and achieve an inflation rate of zero percent. If we assume that velocity is constant, does this goal of zero inflation require that the rate of money growth equal zero.
Suppose that a corporate bond with a Baa credit rating and five years to maturity has a yield to maturity of 8 percent. Suppose that the government of the city of Udwellum, which has a Baa credit rating , issues a bond with the same time to maturi..
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