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A temporary supply shock, such as a drought, would
(a) increase the marginal product of capital and increase desired investment.
(b) decrease the marginal product of capital and decrease desired investment.
(c) have little or no effect on desired investment.
(d) decrease both the marginal product of capital and the marginal product of labor in the long-term future.
The following relationships describe the economy of a random, fictitous country: Sketch the IS curve and LM curve for 1998 on a diagram and show the point where the interest rate and output are determined. Show what happens in the diagram if the mone..
Two common drawbacks of Pigouvian subsidy mentioned in the literature are related to monetisation and measurement of social cost (Baumol) and reciprocity of social cost (Coase). What alternatives to Pigouvian taxes are proposed in the literature? Hav..
If economy is operating at full employment and exchange rate increases explain why Federal Reserve will be less inclined to raise interest rate.
Suppose several additional junior staff are employed in subsequent years after a new business is established. The owner notices a large increase in the motor vehicle expense account.
In January, the interest rate is 5 percent and firms borrow $50 billion per month for investment projects. In February, the Federal government doubles its monthly borrowing from $25 billion to $50 billion. That drives the interest rate up to 7 percen..
q. recall that is the economy continues to be strong abc company may need to increase its production by about 50
One feature of a financial crisis is that there is a high demand for safe assets and a low demand for risky assets.
What is the current macroeconomic situation in the United States? What should the Fed do about it? What monetary policy tools should the Fed use to achieve the results you recommend?
In 2012, Balnur taught music and earned $20,000. She also earned $4,000 by renting out her basement. On January 1, 2013, she quit teaching, stopped renting out her basement, and began to use it as the office for her new Web site design business.
An asset with a first cost of $240,000 three years ago is sold for $285,000. The asset was depreciated by the MACRS method and has a book value of $69,120 at the time of sale. Determine the amount of the capital gain, if any, and the amount of the de..
A corporation's marginal tax rate is 34 %. An outlay of $35,000 is being considered for a new asset. Estimated annual receipts are $20,000 and annual disbursements are $9,000. The useful life of the asset is 5 years, and it has no salvage value. Assu..
Briefly explain relationship between market price and a firm's profitability in a perfectly competitive market. How are the Zero profit point and the shutdown point for a firm operating in a perfectly competitive market determined?
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