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Assume an economy in long and short run equilibrium in the Aggregate Deamnd/Aggregate Supply model. There is a sudden drop in consumer confidence in the solvency of pension funds. Explain, with support from a graph, how this is shown in the AD/AS model. 2. Further explain with support from a graph how the self-correcting mechanism would work in the above example. What are the key assumptions in believing that the self-correcting mechanism works to escape from economic recession?
Mention and describe the three theories for why the short-run aggregate-supply curve is upward sloping.
Disclose what the book suggests once the short-term rate is much cheaper than the long-term in interest rate. Substantiate whether or not that is a normal occurrence or a cause for alarm.
The depreciation rate is d = 0.05 and the labor force growth rate is n = 0.01. The saving function, in aggregate form, is St = 0.3Yt . Find the steady-state capital-labor ratio, the steady-state value of output per worker, and the steady-state val..
Show that it is also possible that the government can give the consumer a cash grant of less than $100 (thus lowering the cost to the government) and the individual will be no worse off than under the food stamp program.
Illustrate what price is required to maximize income but keep profits at a minimum of $300?
Elucidate which economic concepts, sure as comparative advantage, apply to your firm. Explain how these economic concepts can be used to address the firms's problem and opportunities.
Government imposes excise taxes on goods which have inelastic demand, such a cigarettes.
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.
Illustrate what do you think will happen to the price and quantity of DVD players if. The availability of good movies to play on DVD players increases.
Assume bread is subsidized in a small Caribbean nation with a high percentage of citizens who live in poverty. The subsidy is paid to suppliers of bread through government in amount of 50 pesos per loaf.
A machine with a ten year life is to be depreciated by the MACRS method. The machine has a 1st cost of $30,000 with a $5,000 salvage value. It's yearly operating cost is $7,000 per year.
A business have 4-lockbox collection centers that average $235,00 in payments each day. Payments are invested daily in shortterm securities at collection center banks.
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