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The 1999 CPI is 232.6. Rounded to the nearest dollar, what has been the real change in Bill's net worth?
How are leakages and injections balanced? Why will demand and supply in the product market be equal if leakages and injections are equal?
Explain why if taxes are fixed, disposable income in a full-employment economy is fixed. Explain why saving may not be very sensitive to the real interest rate.
What is investment? Why does investment decrease when the real interest rate increases? What role do expectations play in investment?
What trade-off between inflation and unemployment did President Kennedy's Council? What happened to inflation and unemployment after the 1964 tax cut?
If learning by doing is important in semiconductor industry why might other nations try to use infant industry strategy to develop their semiconductor industry?
Under what conditions might a company (like Coca-Cola) prefer to use trade secrets rather than patents to protect its formulas?
What are the trade-offs for society as it sets rules for deciding cases such as these?
What negative effects might this change have on the rate of innovation? What positive effect might it have for the economy?
What possible trade-off does society face when it considers loosening its antitrust laws to encourage joint R & D ventures?
Explain how basic research can be thought of as a public good. Why is society likely to underinvest in basic research?
How do positive externalities arise from R & D? Why do externalities imply that there may be too little expenditure on research by private firms?
Why might it be harder to raise capital for R & D than for other projects? How can established firms deal with this problem? What about start-up firms?
Explain the trade-off society faces in choosing whether to offer patents for long or short terms, and whether to offer broad or narrow patents.
In what ways do industries in which technological change is important not satisfy the assumptions of the basic competitive model?
What induces firms to create just the right number of additional jobs to match an increase in the number of workers?
According to the Inflation Calculator, what would $100 in 1860 be worth in 1865? By how much did prices rise during the Civil War?
An increase in the consumer price index will often affect different groups in different ways. How would you calculate an urban CPI or a rural CPI?
Geoffrey spends his allowance on three items: candy, magazines, and movie video rentals. Calculate Geoffrey's price index (CPI) for this basket of goods.
Saw the highest average rate of inflation in the United States? Which of these decades saw the lowest average inflation rate?
Suppose the Farsighted Forecasting Group, an organization of private economists. According to Okun's Law, by how much is the unemployment rate likely to rise?
Explain why the former may run into problems if a large generation is followed by a generation with many fewer members.
Consider an individual contemplating whether to quit her job and go on welfare. How might the fact that welfare is time limited affect her decision?
What happens to her incentives to work? Is it possible that imposing the tax actually will reduce the tax revenues the government receives from the rich?
How redistribution take place through an entitlement program like Social Security, to which all workers contribute and from which all retirees receive benefits?