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From 2002 through 2005, residential investment boomed in the United states, as financial innovations seemingly made it possible to better match borrowers and lenders. (It subsequently became apparent that many of the loans made towards the end of this period were based on unduly optimistic assumptions about the productivity of the underlying investments.)
a. Consider a market-clearing economy in which output (Y1)depends only on the capital stock (k1) and an exogenous productivity variable (θ1) according to the production function y1 = θ2f(k2). Use a two quadrant diagram with the capital stock, ko on the horizontal axes and consumption, Co on one vertical axis and the real interest rate ro on the other -to depict the steady state equilibrium of the economy. Label the various curves plotted in your diagram.
b. Suddenly, current and expected future values pof I are believed to have interested. How does the Steady state to u depicted in 2(a) shift? How does the economy get from the original steady state to the new steady state? (That is, how do consumption, output and the capital stock. And the real interest rate move, over time, in response to the new information?) What happens to the total value of the stock market as the economy moves from the original steady state to the new steady state?
Suppose that deterioration in the education level of the U.S. population reduces the marginal product of labor.
The airline has an average of 40 passengers paying an average of $200 for this flight. Do you think the airline should be flying between the two cities? Evaluate from a short-run and long-run perspective.
In each of the cases listed below determine what this consumer needs to do (in terms of purchasing X and Y) to maximizes their utility.
Evaluate the range of marginal revenues
Additionally, several other configurations were also estimated. The results are shown on the following pages. Based on this data, answer the following questions. Comment on the significance of time trend and seasonality.
What is Bill's opportunity cost of producing one hat, In which of the two activities does Mary have a comparative advantage.
What were some of causes of stagflation of 1973 and 1979? In what ways were these episodes of stagflation different from great depression of the 1930s?
Discuss the advantages and/or disadvantages of distributing marketable pesticide permits to each farm operating in the watershed equal to 40% of its current level of use of that pesticide, versus simply ordering each farm to reduce pesticide use t..
Use a production possibility frontier to illustrate the probable results of your fiscal policy. By how much did consumption change? By how much did savings change?
Assume that, from an initial consumer equilibrium position, the price of good X falls-explain how and why the consumer's relative consumption of two goods will change.
Calculate the price elasticity of demand for the product below using average values for the prices and quantities in your formula.
Evaluate: "The fact that some airplanes collide is evidence there is 'too little air traffic control'." (Be sure to explain what too little might mean.)
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