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Suppose that the economy starts at equilibrium and the mpc = 0.8. What would be the effect of a 500 increase intaxes once all the rounds of the multiplier process are complete
Assume the government cuts its purchases by $150billion. As a result, the budget deficit is reduced by $40 billion,private domestic saving decreases by $10 billion, disposablepersonal income decreas
Making dresses is a labor-intensive process. Indeed, theproduction function of a dressmaking firm is well described by theequation Q = L - L2/800, where Q denotes the number ofdresses per week and L
Consider Good E, which, when sold in a particular country, has anequilibrium price = $10.00. The government of that country decidedthat it doesn't like that equilibrium price, and so passes alaw whi
Suppose that: y-sqwiggly line on top=1/2Y1+1/3Y2+1/6Y3 a) show that y-sqwiggly line on top is a linearestimatorb) show that y-sqwiggly line on top is an unbiasedestimator
David Ding advertises on a local radio station. For the past sixweeks, the manager has kept records of the number of minutes ofadvertising that were purchased, and the sales for that week. Week1, 2
In a hypothetical economy, the annual velocity of money is 10,and level of real output is $800 billion. In year 1, the economy'smoney supply is $100 billion and in year 2 it is $112 billion.Calculat
A small island nation that lives in anarchy and does not have agovernment is endowed with indestructible coconut trees. Thesetrees live forever and no new trees can be planted. Every year $1million
Consider the market for taxi ridesin a particular metropolitan area. a) Suppose that, when the price permile increases by 40%, total miles demanded falls by 30%. Solve for the price elasticity
Quagmire Corporation wants to set up a manufacturing plant to last for 20 years. Initial costs at year 0 are $18,000 for the building and $31,000 for the equipment. At year 10 there will be a major
The skinny corporation produces excerise videos according toQ=(KL)1/2, where k is the amount of capital used and l is theamount of labor employed. if capital cost $16 per unit and laborcost $2 per u
Suppose you consider a sales tax of 10% on thismarket. Suppose that the firm has to pay the tax, as istypically the case with sales taxes. Hence, if the firmproduces quantity y of output, the price
Let p* be the equilibrium price and y* theequilibrium quantity, so that p* = A-By*. Now suppose thedemand in the market shifts, so that the new demand curve is p =A'- B'y*. Hence, if the firm does n
Assume that the threatened default on the government debtdescribed in the problem on page 233 of the text has no immediateeffects on any of the "fundamentals" in the economy (C, G, T, andY). However
David Ding advertises on a local radio station. For the pastsix weeks, the manager has kept records of the number of minutes ofadvertising that were purchased, and the sales for that week. Week1, 2
A put option has parameters: X=1.8, S=1.82, R=.05, Volatility of14% and T=90/365 What is the price of the put option when S=1.81 one day later i.e. T=89/365.
Assume that a country's production function is Y = AK0.2 L0.8.The ratio of capital to output is 2, the growth rate of output is4% and the depreciation rate of capital is 8%. Capital is paid itsmargi
Suppose an economy with a constant labor force of 85 millionworkers is in steady-state unemployment. The finding rate is 50%per month and 2.5 million workers lose their jobs every month. Whatis the
Assume an economy with steady-state unemployment. The separationrate is 2.5% per month and the finding rate is 47.5% per month. Theadult population is 120 million workers and the labor-forceparticip
a)what is equilibrium level of national income using table above b)at the equilibrium level of national income what will consumption expenditure be c)at the equilibrium level of national income what w
Jodie earns 25,000 atthe end of year 1,when the CPI was 460. If the CPI at the end ofyear 2 is 504, what would Jodie have to earn at the end of year 2to maintain a constant real wage.
A firm's output is L(100 - L) when it uses L50 units of labor, and 2500 when it uses L> 50 units of labor. The price of output is 1. A union thatrepresents workers presents a wage demand (a nonne
Edwina, a commoditiesbroker, has acquired an option to buy 1,000 oz of gold at $50/oz.If she takes her option and Congress relaxes the import quotas, shecan sell the gold for $80/oz. If she takes th
What is the capital recovery(CR) amount associated with a machine that will last 16years, its first cost (incurred in year 0) is 735 dollars, itsoperating costs are 65 dollars per month, and its sal
An alumnus of WestVirginia University wishes to start an endowment that will providescholarship money of $40,000 per year beginning in year 5 andcontinuing indefinitely. The donor plans to give mone