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Large-scale wars typically bring a suspension of international trading and financial activities. Exchange rates lose much of their relevance under these conditions, but once the war is over, governments wishing to fix exchange rates face the problem of deciding what the new rates should be. The PPP theory has often been applied to this problem of postwar exchange rate realignment. Imagine that you are a British Chancellor of the Exchequer and that World War I has just ended. Explain how you would figure out the dollar/pound exchange rate implied by PPP. When might it be a bad idea to use the PPP theory in this way?
Consider an agricultural subsidy provided by the US government. Consider also that milk is one of the products subsidized. If there is NO trade with the rest of the world, the domestic price of milk in the US would be $2 per gallon and the equilibriu..
How would you go about estimating the different probabilities of three alternatives occurring if you have little empirical data on which to base your estimates?
Due to expanded growth in a certain portion of the city, a new waste truck capacity is needed. An additional truck can be purchased now to replace the presently owned assets. The city uses a 5% interest rate for project evaluation. It is economically..
Macroeconomics: How does government borrowing crowd out investment? What is the relationship between government borrowing and budget deficits?
Interpret the following graph showing the potential changes in supply of money compared to the demand for money. The demand for money is represented by line MD and the initial supply of money is represented by line MS. If there is no change in the in..
q1. a hearing is scheduled for your company to present arguments that your firm has not increased its market power
The control function of the federal reserve system is divided into quantitative controls and qualitative controls. What is meant by the term "qualitative"?
An industry consists of three firms with sales of $310,000, $725,000, and $405,000. Calculate the Herfindahl-Hirschman index (HHI). Calculate the four-firm concentration ratio (C4).
Are there any particular imported commodities that you or your firm rely on. Illustrate what has happened to the supply of these imports over the years.
Explain why a nation that imposes tariffs on imported goods may find its welfare improving should the tariff result in a favourable shift in the terms of trade.
q1. on a 100-acre farm a farmer is able to manufacture 3000 bushels of wheat when he hires two employees. also he is
Congress cannot dictate how many workers industries hire at mandated wage. Given this fact, Illustrate what are effects of this law. Specifically, illustrate what happens to employment, output and total amount earned by workers.
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