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Throughout much of the 1990s, the United States experienced declining energy prices. Assume that the U.S. economy was in long-run equilibrium before these declines began.
a. Use the aggregate demand-aggregate supply model to illustrate graphically the short-run and long-run impact of this decline on output and prices.
b. If the Federal Reserve attempted to offset this deviation from the natural rate in the short run, should the money supply be increased or decreased?
In which of the following circumstances is expansionary fiscal policy more likely to lead to a short-run increase in investment? Explain?
Explain the influence that transferable property rights versus non-transferable property rights, has on individual decision making.
What is the maximum amount of good Y that can be purchased if X and Y are the only two goods available for purchase and P x = $5, P y = $10, X = 20, and M = 500?
Explain why a monopolist will never set a price (and produce the corresponding output) at which the demand is price-inelastic.
Explain the concept of externality. What does it have to do with the efficient allocation of resources?
Do the estimated coefficients have the required signs to yield a-shaped AVC curve? Discuss the significance using the p-values.
Explain International Monetary System
Compute the expected value (revenue) from each project. Compute the coefficient of variation of each project, and find out which project should the company choose. Compute the variance and standard deviation of expected value from each project.
Explain how the aggregate expenditure function shifts in response to the changes in each of the following variables:
A firm uses two inputs, unskilled labor (L) and capital (K) to produce its product. The wage rate for one unit of labor is $5, while units of capital cost $20.
Suppose you are running a photo copy center that makes illegal copies of the textbook. An illegal copy of the book sells for $10 and you only have one copy machine.
Mention and describe the three theories for why the short-run aggregate-supply curve is upward sloping.
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