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1. Suppose economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by $30 billion. a. If these economists ignore the possibility of crowding out, what would they estimate the marginal propensity to consume (MPC) to be? b. Now suppose the economists allow for crowding out. Would their new estimate of the MPC be larger or smaller than their initial one?
2. The government spends $3 billion to buy police cars. Explain why aggregate demand might increase by more than $3 billion. Explain why aggregate demand might increase by less than $3 billion.
Elucidate the impact of the global financial crisis of 2008-2009 on the economies of industrialised countries and emerging markets. What effect do problems like these have on attitudes towards free trade.
Suppose the economy is in the midst of a severe recession. Determine which of the following policies would be consistent with active fiscal policy?
Are you a Classical or Keynesian economist? Pick a perspective and defend.
Are you for or against free trade Are you for or against NAFTA What is the economic basis for trade Explain the underlying facts that support free trade and give an example of a good that you purchased recently that is based on resource difference..
If government pays a subsidy in a market and households keep most but not all of the subsidy payment then we know a) the demand curve is perfectly elastic. b) the demand curve is relatively more elastic than the supply curve.c) the demand curve is re..
Discuss the strengths and weaknesses of such an application. In your answer, include a discussion of the three types of demands for money using the Keynesian model.
Jonathan accepted the offer and, eager to please her, spent lavishly in preparing for the evening. His purchases included a new blazer, new shoes, and expensive floral arrangement, and champagne. At the appointed time, Jonathan arrived at Rosalie'..
One of the biggest risk factors for multi-nationals enterprise (MNEs) is using the potential volatility of exchange rates. Explain mechanisms that can be used to alleviate the risk, including discussion of ways in which an MNE might increase profi..
In a multibank system, an individual bank makes loans only up to the level of its excess reserves, while the whole commercial banking system can lend out money that is a multiple of the original bank's excess reserves. Why is there this difference..
Ryan's annual salary is $120,000 per year. He asked his employer to pay $20,000 of his salary to his elderly grandmother who is in a nursing home. The employer makes the $20,000 payment directly to the grandmother and pays the balance to Ryan.
Discuss the impacts that entrepreneurship and creative disruption have on existing organizations and the workforce (i.e. machines replacing workers, new skills required due to technological innovation, etc.). Should entrepreneurs be concerned with..
Suppose that in Question 1, the government rather than using a tariff, decides to limit the quantity of imports to 4. All the quota licenses are given to the nephew of the minister of finance (no rent seeking). Show on a new graph the outcome of t..
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