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"The operator of the tunnel that links Britain and France, Eurotunnel, said that commercial and tourist traffic using its car and coach shuttle service had fallen sharply in 2004, leading to a drop in operating revenues of 4%. Eurotunnel's chief executive, Jean-Louis Raymond, blamed cut-throat competition from budget airlines." (News story, January 2005)
a. If Mr. Raymond is correct, are the services of airlines and Eurotunnel substitutes or complements?
b. Use demand and supply analysis to explain how lower airfares between Paris and London impact the market for the shuttle services of Eurotunnel.
Suppose that the economy is thought to be 2% above potential (that is, the output gap is 2%) when potential output grows 4% per year. Suppose also that the Fed is following the Taylor rule, with an inflation rate of 2% over the past year.
Economists also businesses almost always compare costs and benefits in their decision making.
Suppose that the airplane can be purchased from an outside supplier. What is the relevant unit cost for this make-or-buy decision.
Rachel earns nothing during her learning period, 600 during her working period, and 300 during her retirement period. She has no initial assets. The real interset rate is 0.25. Rachel is not allowed to borrow by the banks.
Proide that the economy grows is allowed to grow through the banking system and the creation of money through lending.
A famous quarterback quite signed a $15 million contract providing $3 million a year for 5 years suppose that he gets paid at the end of each year.
Elucidate what factors besides your quantitative analysis should be considered in making this decision.
Explain how regular and lasting were the past trends. What are the chances of these patterns are changing. How accurate is the historical date that we use in time series.
President Obama recently agreed in December with Republicans in Congress to extend existing tax cuts that were scheduled to expire December 31 and to create new tax cuts as well. Meanwhile, recent reports suggest that the economy may expand more.
Assume you were doing lunch with your best friend who just enrolled in an economics class. He was complaining about how irrelevant the class was,
Give me some information on taxing pollution. Discuss it using the ideas of externality, supply, and demand. How do we determine the optimal level of pollution? Is the optimal level of pollution zero Why or why not
How have these aggregates been growing in the past year compared with the value if you can, download the data from the internet , or enter them by hand into a spreadsheet, and see if you can plot the data to compare.
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