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Aggregate Demand & Supply

SCENERIO : Buffaloes Bill the Taxpayer Back home on the range, a funny thing is happening to the beef cattle and buffalo businesses. A. The news for cattle ranchers is not good. · The national cattle herd has been in decline for the past twenty years. · Per capita consumption of beef is down 20 percent in the same period. · Producers' costs go up while beef prices go down. · Kids that grew up on cattle ranches are leaving them in droves. B. The buffalo business, on the other hand, is chipping along. · Chi-chi gourmands and the fat-avoiders are driving demand skyward and along with it, prices. · While a healthy cow and her calf sell for $600-800, a pregnant buffalo heifer sells for $3000-5000. · Some 20,000 buffalo are slaughtered annually. About 135,000 cattle are butchered every day. There are problems with the buffalo producers though. They produce fewer pounds of choice meat per carcass. More than a third of the animal is ground up into buffalo burger, meat too lean to make good patties. Hence, there is a huge surplus of ground buffalo. In May 1999, the Department of Agriculture announced it would buy 25 percent of the industry's ground-meat production and give it to federal nutrition programs. They will pay $3.45 per pound, more than twice as much as it pays for beef. Sources: John A. Baden, "Taxpayers Get Buffaloed," The Wall Street Journal, June 24, 1999, p. A22, and Mindy Sink, "Judge Puts Hold on Grazing," New York Times," June 1, 2002, p. 11. IN 150-200 WORDS, ANSWER THE QUESTIONS BELOW (the total word count for the 5 questions) 1 Name an example of the invisible hand at work from the case. 2. Who would be better able to analyze this market, a microeconomist or a macroeconomist? 3. How would you describe the opportunity cost for cattle ranchers? 4. Is this an example of positive or normative economics? 5. Name a social, political, and economic force from the case.

SCENERIO : Buffaloes Bill the Taxpayer Back home on the range, a funny thing is happening to the beef cattle and buffalo businesses. A. The news for cattle ranchers is not good. · The national cattle herd has been in decline for the past twenty years. · Per capita consumption of beef is down 20 percent in t

compute the lifetime opportunity cost in terms of present value

10 QUESTION Study Guide 1. Research shows that after-school jobs are highly correlated with decreases in grade point averages. Those who work 1 to 10 hours earn a 3.0 GPA and those who work 14 hours or more earn on average a 2.6 GPA. Higher GPAs are, however, highly correlated with higher lifetime earnings. Assume that a st

expansionary fiscal policy

In an expansionary fiscal policy to overcome the current recession, the Federal Government increases its spending to impprove the nation's physical infrastructure (roads, airports, seaports, airports, etc) A-Show graphically what happens to equilibrium income, interest rate, and price level using the Aggregate Demand Aggreg

Aggregate Supply and Aggregate Demand

Assuming that the aggregate price level is constant, the interest rate is fixed, and there are no taxes on foreign trade, how much will the aggregate demand curve shift and in what direction if the following events occur? A. An autonomous increase in consumer spending of $25 billion; the marginal propensity to consume is 2/

Scarcity and the Supply Curve

1. Describe how the concept of scarcity affects the aggregate supply curve. 2. Suppose the government mandates that all companies over 50 employees must provide an increased level of health care benefits. Could you please explain what effect this will have on the aggregate supply curve. 3. Assume the economy is at equil

Money Growth

If there is a recessionary gap in the short run, then in the long run a new equilibrium arises when input prices and expectations adjust downward, causing the aggregated supply curve to shift downward & the right & pushing equilibrium real GDP back to its long run potential value. The Federal Reserve can eliminate a recessionary

Economics Questions

If the Fed increases the money supply, then a. the interest rate declines and the quantity of money demanded increases b. the interest rate declines and the quantity of money demanded declines c. the interest rate increases and the quantity of money demanded increases d. the interest rate increases and the quantity of money

Economics Questions

The demand for money varies a. directly with both the price level and the level of real GDP b. inversely with both the price level and the level of real GDP c. inversely with the price level and directly with the level of real GDP d. directly with the price level and inversely with the level of real GDP e. inversely with th

Competitive market

Competitive market prices are determined by the interplay of aggregate supply and demand;individual firms have no control over price. Market demand reflects an aggregation of the quantities that customers will buy at each price. Market supply reflects a summation of the quantities that individual firms are willing to supply at d

Aggregate supply-demand

Please help with the following problem. You observe that output is above full-employment output. Politicians are arguing about the possible reasons. One party claims that this is due to a drop in world oil prices. The other party claims that this is due to an increase in consumer spending. Using aggregate supply-aggregat

Effects of tax rebates and government spending

Which of the following changes to fiscal policy would have a larger overall impact on Aggregate Demand? Explain your answer in a paragraph or 2. -A program of tax rebates, distributed uniformly across the population of those filing tax returns, amounting to $10 billion in total rebates. -OR- -

Competitive Markets

Most commercial fish species in nearly every ocean and sea are being rapidly depleted. The world's fisherman & vessels represent twice as much fishing power as major stocks of fish can sustain. Assume that ocean fishing resembles a competitive market in the following ways...there are no significant barriers to entry and ther

Steady-state interest rates

Now we will solve for the steady state in a calibration of the US economy in 2000. In this problem, you will assume that the rate of growth of the work force is n = 0.017 and there is no exogenous technological progress. The aggregate production function for the US economy in 2000 is Y = (11.5)K 1/3 L 2/3 . The units are bill

Asset prices effect banks

According to Gerald Baker, columnist for the London Financial Times, November 23, 1999, "In the United States, banks are, by whichever measure chosen, in unusually good shape for this stage of an expansion. There are few signs of emerging excesses that even undermined America's own banking system at the end of the 1980's...Agai

Aggregate Demand Curve

The question asked that suppose that the Organization of Petroleum Exporting Countries raises oil prices by 50 percent in 2005. What effect will thishave on the U.S. Aggregate demand curve? On the U.S. Short-run aggregate supply curve?

Fishing, congestion, government fees, privatization, allocation of fishermen

Please see the attachment. I require very specific explanations for each part. If necessary, assumptions may be made but please make these explicit and make sure they are reasonable so that I can follow what you did. Also make the solutions as technical as possible. (See attached file for full problem description)

Short and Long run factors

Answers to questions: Regarding the economy's adjustment process, use the AD/AS model to: a) Show the short-run effects of an increase in desired saving(assuming that the economy is initially in a long-run equilibrium with Y* = Y). b) Describe the adjustment process that brings the economy to its new long-run equilibriu

Keynesian Theory

Why can output rise "without inflation" in the "Keynesian" range of the aggregate supply curve?

Change in Autonomous Spending

Please see attached. --- 2. (A Change in Autonomous Spending) Suppose that when aggregate output equals zero, consumption equals $100 billion, autonomous investment equals $200 billion, government purchases equal $50 billion, and net exports equal $50 billion. Suppose also that MPC is 0.9 and MPM is 0.1. a) Construct a t

Basic Macroeconomics question (3)

This is a question from a past exam paper in Macroeconomics. Unfortunately I haven't been able to get an answer sheet for this paper so I am looking for a "model answer" (if such a thing exists!) to the question for revision. Under what circumstances would a rise in aggregate demand have little effect on real national income?

Basic Macroeconomics question

Consider a closed economy, with fixed prices, represented by the following set of equations: D = C + I + G C = cYd Yd = (1 - t)Y t = 0.25, c = 0.8 I = 700 - 100r G = 300 L = 2500 + 2Y - 500r Where, D is the aggregate demand, C is consumption, Yd is the disposable income, t is the tax rate, I is investment, r is

Canadian Economy and Equilibrium Price

Text Reference - 3. The United States is proposing a significant increase in duty on Canadian softwood lumber. Use appropriate diagrams to answer the following questions about the Canadian economy. (20 marks) (a) How would higher duty on softwood lumber affect the equilibrium income and the

Macroeconomic Prescription for the Near Future

Subject: modern graph and prediction of aggregate supply and demand curve Details: write a paper describing my assessment of the current aggregate demand and aggregate suppy curves; my prediction and prescription for the near future. sources must be sited. The ad/as curves reasonably coincide with reality, include graphics, ec

Open-Market Operations and Aggregate Demand

Would each of the following increase, decrease, or have no impact on the ability of open-market operations to affect aggregate demand? Explain your answer. a. Investment demand becomes less sensitive to changes in the interest rate. b. The marginal propensity to consume rises. c. The money multiplier rises. d. Ba

Classical Theory

A classical economist spends a good deal of time worrying that: A) policies will overshoot their output marks and can therefore never move GDP closer to its potential. B) government spending will crowd private spending and investment out of the market. C) stabilization policy is never sufficiently "fine-tuned." D)