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1. An economy is in long-run macroeconomic equilibrium when each of the following aggregate demand shocks occurs. What kind of gap-inflationary or recessionary-will the economy face after the shock, and what type of fiscal policies would help move the economy back to potential output?a. A stock market boom increases the value of stocks held by households.b. Firms come to believe that a recession in the near future is likely.c. Anticipating the possibility of war, the government increases its purchases of military equipment.d. The quantity of money in the economy declines and interest rates increase.2. In each of the following cases, either a recessionary or inflationary gap exists. Assume that the aggregate supply curve is horizontal so that the change in real GDP arising from a shift of the aggregate demand curve equals the size of the shift of the curve. Calculate both the change in government purchases of goods and services and the change in government transfers necessary to close the gap.a. Real GDP equals $100 billion, potential output equals $160 billion, and the marginal propensity to consume is 0.75.b. Real GDP equals $250 billion, potential output equals $200 billion, and the marginal propensity to consume is 0.5.c. Real GDP equals $180 billion, potential output equals $100 billion, and the marginal propensity to consume is 0.8.
How much excess reserves does the bank hold and how much more can this bank lend - What is the required reserve ratio?
Write down the Lagrangean function associated with this problem and derive the first-order conditions for this problem.
The Teenager Company makes and sells skateboards at an average price of $70 each. During the past year, they sold 4,000 of these skateboards. The company believes that the price elasticity for this product is about -2.5. If it decreases the price ..
Compute the industry price necessary for firm to supply 10,000, 20,000, and 30,000 pounds. Compute the quantity supplied by the firm at industry prices of $1.50, $2.50, and $3.50 per pound.
Explain why hyperinflation has such a devastating impact n economies. Explain what it takes to stop hyperinflation Describe the three types of unemployment. What types of government programs would be most effective in combating each type of unempl..
In order to derive an individual's demand curve for salmon, we would observe what happens to the utility-maximizing bundle when we changea. income and hold everything else constant. b. the price of a close substitute and hold everything else constan..
what are the expressions for AC's total revenue ,marginal revenue, total cost and marginal cost as a function of output? what is AC's fixed cost and what is the variable cost?
Using indifference curves and budget constraints, show how a government program that increases education and job training for low-skilled women can increase low-skilled female labor force participation over time. Assume everything else about women..
An engineering practitioner can lease a fully equipped computer and color printer system for$800 per month or purchase one for $8500 now and pay a $75 per month maintenance fee. If the nominal interest rate is 15% per year.
Explain graphically and verbally what happens to the market in the short run and in the new long run equilibrium if factor prices and demand are assumed to remain the same as before.
What motivated the producers of all the individual products in the store to make them and offer them for sale How did the producers decide on the best combinations of resources to use Who made those resources available, and why How does the market..
Discuss the current monopoly to provide a brief overview of the company. How did the monopoly arise? Did the monopoly increase barriers to entry? Does the company behave like a monopoly or more like a competitive firm?
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