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A. The accelerator principle states a higher growth rate of real GDP results in higher planned spending. Will this lead to more volatile investment relative to consumer spending?
Explain.
B. Explain why a high level of aggregate unplanned inventory might make it difficult for an economy to recover.
A trader sells a 2-month call option contract on 100 shares of a stock with strike price $50. The price of the option is $5. Suppose the options are held until the end. What is the trader’s profit if the stock price is $58 then?
Consider the following game between player 1, who chooses among strategies U, M, and D, and player 2, who chooses among strategies A, B, and C. Why is this normal form representation different from others in the chapter? The most reasonable predictio..
If the central bank does not intervene in the foreign exchange markets (the RA balance is zero), briefly explain why CA + KA = FA.
Using a market or industry as an example, explain how the Prisoners' Dilemma game helps explain observed (real-world) behavior among oligopolistic firms.
q.tax cut under fixed as well as flexible exchange rates1 what is the impact of a tax cut in an economy operating under
What role does integrated marketing communications plan in creating a brand image? How does the media contribute to the development of a brand's image? Why is it important for marketers to understand and appreciate all the various integrated marketin..
Firms like Papa John’s, Domino’s, and Pizza Hut sell pizza and other products that are differentiated in nature. While numerous pizza chains exist in most locations, the differentiated nature of these firms’ products permits them to charge prices abo..
Imagine that the mayor has hired you as a consultant to evaluate the increase in aggregate demand in the city where you live. Describe to the mayor one (1) aggregate demand and supply factor that would have the greatest impact on the economy of your ..
The most you would be willing to pay for having a freshly washed car before going out on a date is $15. The smallest amount for which you would be willing to wash someone else’s car is $12.50. You are going out this evening and your car is dirty. How..
You are evaluating two different silicon wafer milling machines. The Techron I costs $258,000, has a three-year life, and has pretax operating costs of $69,000 per year. The Techron II costs $450,000, has a five-year life, and has pretax operating co..
Indentured servants, whites bound to service for a limited amount of time, were an important part of the labor force in colonial America. In many areas, they outnumbered slaves during the 17C. In exchange for labor over the specified period, indentur..
Suppose the Earned Income Tax Credit gives workers 40% of their earnings for earnings up to $15,000 and begins to reduce the credit by 20% for every dollar of earnings above $22,000. Draw the budget constraints before and after this EITC goes into ef..
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