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An open macroeconomic model is represented parametrically as follows
If there are n firms in the industry, find expressions for the competitive equilibrium price and quantity. What is the equation for how much each firm produces? What is the equation for the profit of
Explain why the required reserve ratio, the excess reserve ratio, and the currency ratio are in the denominator of the m1 and m2 money multipliers.
What is the competitive equilibrium price per ride? What is the equilibrium number of rides per day? What is the minimum number of taxi cabs in equilibrium?
You win a lottery with a prize of $1.5 million. Unfortunately, the prize is paid in 10 annual installments. The first payment is next year. How much is the prize really worth? The discount rate is 8%.
Why do some stores offer senior citizen discounts on Tuesdays? Senior citizens have perfectly inelastic demand curves, whereas other shoppers do not.
Consider the following statement: “Because deficit reduction is costly to the economy, governments should never run budget deficits.”Do you agree with this statement? Briefly explain.
The budget deficit projections in this chapter include net interest on the debt, which depends on interest rates. Use the loanable funds model to explain what is likely to happen to interest rates and
Studies have shown a link between rising debt-to- GDP ratios and real interest rates. Investment is not the only category of spending that might be sensitive to interest rates.
How might budget deficits affect long-term economic growth?
Suppose that a country has a debt-to-GDP ratio of 64%. The growth rate of real GDP is 3%. Assume that seignior age is zero and the real interest rate is 2%.What primary deficit as a percentage of GDP
Given this information, was Japanese fiscal policy sustainable? If not, what would the primary budget deficit have to be to make fiscal policy sustainable?
What are the consequences of having a fiscal policy that is not sustainable?
Marty has been laid off from her job at an aircraft plant but expects to be recalled when the economy picks up.
The quantity theory of money states that changes in the money supply have predictable effects on the price level, or, in other words, that money growth determines inflation in the long run. Under what
The Federal Reserve unexpectedly increases the rate of growth of the money supply by 1%, and this change is expected to be permanent. What nominal interest rate will banks charge on new mortgages?
With a falling price level, what happens to the actual real interest rate? Does your answer depend on what happens to the nominal interest rate? Briefly explain.
What is seignior age? In what sense is it an inflation tax? What are shoe-leather costs? What are menu costs?
What is hyperinflation How does hyperinflation occur?
If the production function is Y = A K1/2L1/2 what is total factor productivity?
Graph the production function, with capital on the horizontal axis, and use your graph to explain the difference between a doubling of the labor force and a doubling of total factor productivity.
Describe how real GDP per capita has changed throughout the world from 1820 to the present. 1.3 How is labor productivity related to the standard of living?
The Effect of a Decrease in the Growth Rate of the Money Supply
The Effect of an Increase in the Growth Rate of the Money Supply on the Interest Rate
What is a store of value? What types of assets act as a store of value?