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It has been argued that AIDS drugs should be supplied to the countries of Sub-Saharan Africa at a price near to marginal cost of production given the very low income levels in these countries (monthly income averaging not much more than $30). Use our discussion of price discrimination to justify this argument. What problems do you envisage in implementing the policy?
Political business cycle: Do economic events affect presidential elections? To test this so-called political business cycle theory, Gary Smith 20 obtained the following regression results based on the U.S Presidential elections for the four yearl..
Your analyst tells you that he has estimated the following linear regression model of your company's long run technology:
Suppose that because of the ongoing financial turmoil banks become more prudent: that is, other things equal, banks want to hold more excess reserves and make fewer loans.
Illustrate and explain the interaction of households, businesses, government and global markets in the circular flow of economic activity.
The demand function for VCRs has been estimated to be Qv = 123 - 1.7Pt + 46 Pm - 2.1Pv -5M, where Qv is the quantity of VCRs,Pt is the price of a videocassette, pmis the price of a movie, Pv is the price of a VCR, and M is income.
The price per unit remains $7.50 in both scenarios. Does the labour analyst's argument hold? Explain why or why not, and use data to prove your point. (Hint: calculate total costs in both circumstances).
Explain how the Central Bank can set the nominal interest rate in the money market. In addition, explain how it can use expansionary monetary policy to boost GDP if the economy is in a recession.
Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?
Assume the airline industry consisted of only 2 firms: American and Texas Air Corp. Let the two firms have identical cost functions, C(q) = 40q. Suppose the demand curve for industry is given by P = 100 - Q and that each firm expects the other to ..
Consider the following data on US GDP-What was the grwoth rate of the GDP deflator between 1999 and 2000?
Suppose a frost kills a large portion of an orange crop, with a resulting higher price of oranges. It has been said that such an increase in price benefits no one since it cannot elicit a supply response; the higher price, it is said, simply "line..
Mention and explain the two types of inflation. Which sort of inflation would most likely be associated with the negative GDP?
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