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a) According to theory, if you lower interest rates, business investments and consumer purchases of large durable goods are supposed to increase. In return, this is to help pull us out of a recession. However, this policy of extraordinarily low interest rates has not stimulated investment demand. Why do you think this is the case (hint - think Keynes and animal spirits).
b) How might this policy be exasperating the recession (hint - think of savers and the wealth effect)
c) A colleague of mine said that ‘monetary policy does nothing but create bubbles in the economy'. Do you agree with this statement? How did the low interest rate environment of the ‘post dot com' bubble day help to contribute to the housing bubble? Do you forsee another market bubble in the economy (ie, in the housing market or stock market or in ‘gold stocks' - explain relating low interest rates to a new bubble).
Describe why some firms might suffer diseconomies of scale. Do you know any examples? Could GM be an example of diseconomies of scale?
Discuss short and long run expenses. For the short run discuss the relationship in cost and production theory and the idea of diminishing returns.
A profit maximizing monopolist is earning a postive economic profit. If workers wages rise, what happens to price and quantity ?(assume that the monopolist is still earning a positive profit after the wage increase). Is the monopolist better or wo..
Identify the stocking rate that you would suggest to a risk averse farmer and explain why you would recommend this stocking rate.
Suppose Virginia withdrew $10,000 from her bank. If the reserve ratio is 2 percent theen this transaction willl lead to decreasing ____ in checking account balance.
What is the equation of his budget line and sketch the budget line and two possible indifference curves that Herbert
What can the company do to improve its overall compensation, benefits and professional development practices to enhance the staff's overall effectiveness in meeting the mission and needs of the company?
What key economic concepts underlie the employ of discount coupons by businesses?
Distinguish between a change in Supply and a change in the quantity supplied. Refer to both increases and decreases for each. Distinguish between a change in Demand and a change in the quantity demanded. Refer to both increases and decreases for.
After correcting the sign in the demand function, what is price elasticity of demand for movie tickets and what is the income elasticity of demand for movie tickets?
how can an economy that is below its potential output level attain equilibrium at potential output and shift the aggregate demand schedule to the left?
A perfectly competitive market and the perfectly competitive potato producers in Prince Edward island, the market demand curve rot potatoes
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