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Suppose that a sudden decrease in aggregate demand moves the economy from its long-run equilibrium.
a. Illustrate this change using the aggregate demand-aggregate supply model.
b. What are the effects of this change in the short run and the long run?
Characterize the steady-state equilibrium, and derive a difference equation that explicitly characterizes the behavior of capital stock away from the steady state.
Suppose a family's annual disposable income is $58,000 of which it saves $8000. if their income rises to $64,000 and they paln to ave a total of $9,500 at this income level, calculate the MPS and MPC for this family
What is the relationship between the interest rate and the exchange rate? What is the relationship between the exchange rate and net exports?
Is the evidence-based prediction that IRAs increase savings necessarily correct? Why or why not? How might the distinction between private and national savings affect the analysis?
Then, take a look at these two alternative velocity measures in order to confirm the answer you got for the previous question.
If these countries had wanted to prevent a change in their external debt, what would have been the appropriate policy response, and what would be the drawbacks?
If money supply increases by 5%, what will be the impact on price level if the output increases by 2% and the interest rate remains constant?
You are considering opening a new business to sell golf clubs. You estimate that your manufacturing equipment will cost $100,000, facility updates will cost $250,000, and on average it will cost you $80 (in labor and material) to produce a club.
Other managers worried about the assumptions in the analysis that support the investment-an increase in the number of mortgages processed and a reduction in processing costs. What if the mortgage market did not grow as expected?
Call this graph Graph 1. Label this demand curve D1, and this supply curve S1. Draw the new demand curve given by this change, labeling it D2. Show the new equilibrium price and output, labeling this point A.
I have two goods, Xb and Xw, for beer and wine, and I need to draw the indifference map and determine the MRS. U(Xb, Xw) = min { Xb; aXw}, a>0. What do I need to do here? What does this look like?
What are the implications of these measures for government economic policies?
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