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Question
For each scenario below, draw the appropriate money market and goods market diagrams to illustrate the scenario. Explain the short-run effects on the interest rate and real GDP.
a) The Bank of Canada purchases a large number of federal government bonds from Canadian commercial banks.
b) A new type of robot is invented, resulting in increased productivity across all industries.
c) The U.S. Federal Reserve increases its money supply. What happens to the U.S. economy and the Canadian economy?
d) New mobile technology lets people convert bonds to cash (and cash to bonds) easier than ever before.
e) The U.S. economy enters a recession caused by a negative aggregate supply shock that has no direct influence on Canada. What happens to the Canadian economy?
Economists who work for thegovernment are often called upon to make policyrecommendations. Why do you think it is important for thepublic to be able to differentiate normative statements frompositive statements in these recommendations?
President Obama recently agreed in December with Republicans in Congress to extend existing tax cuts that were scheduled to expire December 31 and to create new tax cuts as well. Meanwhile, recent reports suggest that the economy may expand more.
What is Country A's GDP - What is the composition of GDP by percentage and what is the GDP per capita
Explain the difference between saving and investment as defined by a macro economist. Which of the following situations represent investment? Saving? Explain.
Derive an expression for the comparative static result dY/d (the effect of the change in the anticipated inflation rate on the equilibrium output), and show what its sign is. Briefly explain the intuition for its sign.
1 suppose the yield to maturity on a 2 year treasury note was 4.5 while the yield on a 1 year note was 5.5. assume that
Choose a social difficulty where free markets are not allowed to function and describe how free market features could be introduced to help alleviate the difficulty.
The central bank decides to implement an expansionary policy action. What would you expect to happen to the nominal interest rate, the real interest rate and the money supply and credit growth? Under what economic circumstances would this type of pol..
If we assume that velocity of money is constant, does this zero-inflation goal require that the rate of money growth equal zero If yes, explain why. If no, explain what the rate of money growth should equal.
According to the quantity theory of money, what is the effect of increase in quantity of money?
Suppose the payoffs are instead as follows If they both open at location A, theater earns 12 while the restaurnat earns 8. If both open at B, the theater earns 8 and the restaurant earns 12. IF they open at different locations, they both earn 2.
Adopting the main features of the neoclassical supply of labour, elucidate how these 2 factors may be related.
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