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Question: Good news about the future: An important feature of DSGE models is that they explicitly incorporate the fact that people's expectations about the future affect their behavior today. We can illustrate this feature in our simplified framework by considering the arrival of some "good news." Imagine, for example, that people in the economy learn of a new technological discovery that will make the economy more productive starting 5 years in the future. Consider the effect of this shock today using the labor market diagram of a standard DSGE model (with no sticky prices or wages).
(a) What happens to the labor demand schedule?
(b) What happens to the labor supply schedule?
(c) What is the effect on the real wage and employment in the short run?
(d) How would your answer change if there are sticky prices?
How much would Wyandotte have to reduce the price of polyol to achieve a 15 percent increase in the quantity sold? Evaluate the impact of such a price cut on(i) total revenue, (ii)total costs, and (iii)total profits.
Discuss one aspect of the low-cost-carrier business model, such as Ryanair's, that provides a sustainable cost advantage over a large network carrier, for example, British Airways.
There are 100 dog kennels in Atlanta. An economist studying the pricing behavior of dog kennels tells you that she is limiting her analysis to a time period that does not allow for any new dog kennels to enter the industry or for any established d..
How are exchange rates determined? What is the significance of currency devaluations to the home country? To other countries?
A firm’s Marginal Revenue curve (in class we called this also Marginal Value) is given by w=1200-2L, where w stands for the wage and L for the quantity of labor. The labor supply curve is given as w=L.
Recalculate the free trade equilibrium and the effects of a 0.5 speci?c tariff by Home. Relate the difference in results to the discussion of the small country case in the text.
The real risk-free rate of return has been estimated to be 2 percent under current economic conditions. The 30-day risk-free rate (annualized) is 5 percent. Twenty-year U.S. government bonds currently yield 8 percent.
for the production schedule of a perfectly competitive firm given below answer the following units of labor total
Julio receives utility from consuming food (F) and clothing (C) as given by the utility function u(F,C) = FC In addition, the price of food is $2 per unit, the price of clothing is $10 per unit, and Julio"s weekly income is $50.
Many suppliers experience economies of scale as output expands, which implies that long-run average costs are falling. At very high levels of production, however, many firms are likely to experience diseconomies of scale.
In 2006, the National Football League filed for a trademark on the phrase "Big Game," although it eventually withdrew the filing after firms such as Domino's Pizza, Dell, Time Warner Cable, and some universities filed an objection with the U.S. P..
Moral hazard inhibits the financing of global growth because, Which of the following is true about the World Bank? The multinational organization that aims to promote world economic growth by fostering financial stability is the
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