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Must answer all 4 parts and show all work: Suppose that the Fed’s inflation target is 2%, potential output growth is 3.5%, and the velocity is a function of how much the interest rate differs from 5%: % ?V = 0.5 x (i – 5) Suppose that a model of the economy suggests that the real interest rate is determined by the equation: r = 8.5 - % ?Y where Y is the level of output, so % ?Y is the growth rate of output. Suppose that people expect the Fed to hit its inflation target. A. Calculate the optimal money growth rate needed for the Fed to hit its inflation target in the long run. B. In the short run, if output growth is just 2% for two years and the equation determining the real interest rate changes to r = 4.5 - % ?Y, what money growth rate should the Fed aim for to hit its inflation target in that period? C. If the Fed instead maintained the money growth rate from part a, what is likely to happen to inflation D. Which policy do you think is better in the short run? Which is better in the long run?
A perfectly competitive external market for the intermediate product exists, and an imperfectly competitive external market for the intermediate product exists.
If the economy is competitive so that factors of production are paid the value of their marginal products, illustrate what is the share of total income that will go to land.
Within the next year? Over the long term. Elucidate what resources does he have at his disposal to enhance the reputation of the firm and turn it round.
You are also aware that sometimes when you and the other project members are slaving away over the project, she is playing golf with senior managers. Illustrate what is your evaluation of her behavior.
Conclude how the abatement levels should be reallocated across the 2 industries to minimize costs.
The factory operation creates smoke that affects nearby homeowners, causing respiratory ailments and similar problems.
suppose that the economy is currently in a recession. If policy-makers take no action, explain how will the economy evolve over time. Explain in words and using an aggregate-demand/ aggregate-supply diagram.
Find out the equilibrium level of GDP. Next Find out the multiplier for government purchases also fixed taxes.
If the exchange rate at the end of the year is 105 yens for a dollar then what would be the inflation rate be in the US.
Assume that marginal utility of good A is 4 times the marginal utility of good b. The firm can compute all points on its total cost curve if it knows.
Explain how does marginal analysis affect goods and services, efficiency, equity, and on market economy.
Explain how much is saved at equilibrium. If savings fell by $200 at every level of GDP, illustrate what would be equilibrium level of income.
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