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Consider the recipient's perspective in the global impact of development versus relief aid. Suppose a fixed amount of aid b is given to each worker in a developing country and that donors commit to continue these aid flows indefinitely.
Compare:
Plan 1: b is added to investment
Plan 2: b is added to consumption
Use the Solow growth model to evaluate these plans in terms of their impact on LR steady-state consumption. Assume aid flows do not change people's behavior except as specified in the Solow Growth Model, the domestic savings rate is significantly below the Golden Rule, and there is no technological progress. Use a well-labeled graph to answer this question. Indicate the steady-state levels of k, y, and c under both plans (k1, y1, c1 and k2, y2, c2). If the relative sizes on the graph are not accurate, clarify which is actually bigger (i.e., c1 or c2). HINT: think about shifting sf(k) up by a constant amount b.
Name at least two legislations to prevent monopolization of businesses. Do you believe these legislations have been helpful? Discuss.
Suppose China wishes to peg the Chinese Yuan to the US dollar at $0.20/Yuan. But, because of foreign funds flowing into China, the Yuan appreciates. How can the People’s Bank of China (China’s central bank) maintain the pegged exchange rate? Is the B..
Suppose that a change in the expected inflation rate leads supply and demand to adjust so that the expected real interest rate is unchanged at 3.0 percent.
Under the responsibility scheme proposed by the Taiwan government, households will be charged for solid waste disposal. Is this charge justifiable from an economics point of view?
Apples are bought and sold in a competitive market. Use a graph for the apple market and a graph for an individual firm to demonstrate that firms are earning economic profits. Explain, without using a diagram, whether the situation in (a) can be main..
Firm C&D is a monopolist both in the US market and in the international market. The demand curve for the US market is QUS = 10 − PUS and the demand curve for the international market is QI =20−PI. The firm’s cost function is C(Q)=2Q+2. Suppose the fi..
How harmful is the public debt? Are you concerned about the public debt? Why or why not? Was it wise for the government to use expansionary fiscal policy during the Great Recession even with the effect on the public debt? Do you feel that the benefit..
Suppose there are 100 identical firms in the perfectly competitive note-card industry. Each firm has a short-run total cost curve of the form: ST C = 0.2q^2 + 4q + 10 and MC = 0.4q + 4. Calculate the firm’s short-run supply curve with q (the number o..
q.pharmaceutical drugs have an inelastic demand as well as computers have an elastic demand. suppose that technological
A new group of primary care physicians has decided to locate in a suburb of Washington, D.C. After conducting some primary market research on the area, the group's research firm has characterized the community as comprising boomers, The group hopes i..
Consider the model of Gaynor & Town (2012) in which hospitals choose quality with a fixed price. Recall that the model begins with a demand specification, qj = sj (zj , z\j ) × D(¯p, zj , z\j ), where the hospital’s market share sj is a function of i..
A new common stock issue that paid a dividend of $1.76 million last year. The firm's divendends are expected to grow at 6.1 percent, per year, forever. The price of the stock is currently $27.58. The cost of common equity
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