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Fiscal-Monetary Policies
(a) After 2008 the US Government sought the solution to the crisis. They consider between the Fiscal stimulus and the Monetary expansion. Use a positive-sloped LM and a negative-sloped is to show how Fiscal stimulus could expand the national output in one diagram and show how Monetary expansion could rescue the economy in another diagram. Explain in details how output could change from the initial equilibrium to the new equilibrium. What the assumptions we must have to ensure economic expansion are. (You can use the Money Market diagram and the Demand/production diagram to explain too)
(b) In the mid 2000s US economy was rapidly expanding due to the housing market boom. The Government considered between a reduction in budget deficit and Monetary contraction in order to cool down the economy. Use a positive-sloped LM and a negative-sloped IS to show how Fiscal contraction could decrease the national output in one diagram and show how Monetary contract.
Suppose the demand for a product is given by P = 50 –Q. Also, the supply is given by P = 10 + 3Q. If a $12 per-unit excise tax is levied on the buyers of a good, consumer surplus is equal to
Is there a difference between the moral hazard and principal-agent problems? If yes, explain the differences and give an example of a situation where one of them exists without the other. If there is no difference, argue this is one and the same prob..
In which of the following situations would the Fed conduct contractionary monetary policy?
Consider a relatively small, tropical island nation (using the customary standard for size comparison, this nation is roughly 35 Rhode Islands). It has a healthy, well-educated population and the population growth is stable. Its economy has been stag..
Alice runs a restaurant and it is only open on Wednesdays and Saturdays. Her total cost is TC=10+q2 where q is number of meals served per day. Her restaurant is a price taker. A meal is sold at $12 on Wednesday and $20 on Saturday. Get her average c..
Given the following diagrams: Q1 = 16 bags. Q2 = 11 bags. Q3 = 23 bags. The market equilibrium price is $37 per bag. The price at point a is $85 per bag. The price at point c is $5 per bag. The price at point d is $52 per bag. The price at point e is..
Microsoft appears to have a monopoly with over 90 %of the personal computer operating market. Why then would it not be charging a monopoly price
How would the prices that you pay for textbooks likely change if the textbook publishers in Figure 26-5 switched from behaving non-cooperatively to determining production and prices collusively? Explain your reasoning.
Consider Hastur, an author promoting her new book, The King in Yellow. Will Hastur compete as a monopolist, an oligopolist, or a monopolistic competitor? Why? Given your answer to (i), would you expect Hastur to sell her book at, below, or above marg..
Suppose prices are equal in Europe (in euros) and the US (in dollars) at the end of 2006. In 2007, prices increase by 3% in Europe (in euros) and 1% in the US (in dollars). According to PPP, the euro should appreciate or depreciate? By how much?
Currently product Aft is charged $850,667 depreciation on the Income Statement of Andrews. Andrews is making plant improvements to Aft and depreciation charges will increase to 965,330. Decrease Net Cash from Operations on the Cash Flow Statement. In..
Let’s compare the incentives generated by two different types of public programs. The Aid to Families with Dependent Children (AFDC welfare before reform) provides an income subsidy, G, at 0 hours of work, it is taxed away at a rate t when an individ..
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