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“Super Neutrality” and Changes in Money Growth in the RBC Macro Model.
Consider the basic flexible-price, market-clearing model (which satisfies the Classical Dichotomy) in which r and Y are constant as long as there are no shocks to preferences or technology. The nominal stock of money is growing at rate μ so that:
Mt = Mt-1(1+μ), μ > 0.
Show the money-market clearing condition which determines the price level (P) at any time t.
For r and Y constant, what is the equilibrium rate of inflation and the equilibrium nominal interest rate? Explain.
In a diagram with ln(P) and ln(M) on the vertical axis and time on the horizontal axis, show the time paths of ln(P) and ln(M). (Hint: The nice thing about graphing ln(x) -- the natural log of x -- is that a constant rate of growth of x means that ln(x) is linear.)
What are the determinants of demand? What happens to the demand curve when any of these determinants change? What is the difference between change in demand and change in quantity demanded?
Discuss and illustrate graphically how a decrease in saving rate will affect the steady state level of capital and output. Also illustrate graphically the transition of capital and output from their old steady state level to new one.
The marginal productivity theory states that if a firm operates in a perfectly competitive factor market, it pays each factor of production its marginal revenue product. However, this theory may fail to hold if factor markets are not competitive. Whi..
What role does the data link layer play in order to effect the performance of the LAN?
Suppose you can collect country level trade flows and GDP data. Explain how can you verify monopolistic competition model with data. Illustrate what do you expect is impact of transportation costs.
Wesley was mad at Stacey for breaking up with him. He decided to shoot her, bought a gun, and killed her the next day. Stacey's family is devastated that she died. (a) In addition to the crimes that Wesley may have committed, what type of civil actio..
Elucidate briefly in what way the HOV, or factor content theorem, extends the standard HO model.
Solve for the amount imported, consumer surplus, and producer surplus. Suppose a per unit tariff of $64 is imposed by the government. Solve for the consumer surplus, producer surplus, government revenue and total surplus with the tariff.
Suppose that all markets are perfectly competitive. Is there an economic role for government to achieve a Pareto efficient allocation? Is there a role for government to maximize social welfare.
Suppose the firms in a monopolistically competitive market are earning positive economic profits. What will happen to move the market to its long-run equilibrium?
Henry initially consumes the quantity of pens and pencils shown as B in figure 2. After the prices of both goods change, he buys combination A. From figure 2 and these facts, it must be true that . . .
For each of the following utility functions listed below. Write down the optimization problem, Determine whether you expect an interior or a corner solution,
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