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Key concepts of macroeconomics

1. The consumption function measures the additional consumption due to increased income as a percentage of that increase in income. a. True b. False 2. At relatively high levels of disposable income: a. APC is negative and APS is positive. b. APC is low and APS is high. c. APC is high and APS is low. d. MPC is hi

retail trade unions

Some states have had laws restricting the sale of most goods on Sunday. Most consumers oppose these laws because they find Sunday afternoon a good time to shop, however retail trade associations support these laws. Using economics, give reasons for the trade assoc to support these laws.

Going Global

What are the pros and cons of alternative strategies to tackle a foreign market, such as the acquisition of a local firm, direct investment in production and distribution assets (greenfield project), joint venture, technology licensing, and exports only?

Multiplier Effect in a Local Economy

Suppose the construction of the $360M stadium is to be financed entirely with debt to be repaid over 20 years. The repayment burden is negilible in the short run. If the multiplier effect is Additional Local GDP = [1/(1-MPC)] x initial shift in autonomous expenditures, and Marginal Propensity to Consume is 80%, how much economic

Business Inventories

You all hear on TV every day or so that the US consumer has been holding up and kept our economy going. Conversely, you have heard that the major cause of the current economic weakness has been the rapid decline in business investment. Business inventories are a large component of business investments. In the 3rd and 4th q

Recession 911

Detail how the federal reserve kept the US from sliding into a deeper recession after september 11, 2001. In your description, adress in detail the effect on interest rayes, unemployment, consumption, investment, and net export spending, the multiplier effect, and Real GDP.

Unification of Canada, US and Mexico as single economy

Canada, the United States and Mexico are clearly separate countries. Does this fact alone imply a lower standard of living in each of the three countries compared to the situation where they are united into a single new country?

9/11 recession

Detail how the federal reserve kept the US from sliding into a deeper recession after september 11, 2001. In your description, adress in detail the effect on interest rayes, unemployment, consumption, investment, and net export spending, the multiplier effect, and Real GDP.

Level of Equilibrium GDP

Use the following Keynesian Macroeconomic model to answer the questions followed: Use the following table of consumption data of Bush Garden economy to answer the questions followed 30 pts GDP(Y) Consumption(C) Saving(S) MPC MPS $0 100 100 175 200 250 300 325 400 40


Consider the IS-LM-BP model of an open economy with sticky price levels in local currency, perfect asset substitutability, perfect capital mobility and static expectations. The economy is in both internal and external equilibrium initially. (a) Explain why the BP curve is a horizontal line at i = i*, where i is the domestic n

Quantity Equation of Exchange and the Fisher effect

Based on quantity theory of exchange (with income velocity V constant) and the Fisher Effect...assuming Yf (full employment) growth rate for real GDP is 3.5% and the real SHORT TERM interest rate (r) is a constant 1% what would be the effect on GDP inflation, GDP growth and Nominal LT Interest rates? Please see attached char

Microeconomics Exercises

MicroEconomics Exercises 1) Price Ceiling A local market for three-bedroom rental units is depicted by the following demand and supply equations: Qd = 2000-P Qs = -1000+P where P is the rental price in dollars and Q represents the number of rental units. a) What is the equilibrium rental price and quantity of thre

Sticky wages: Health insurance market

Consider a proposal requiring all employers to provide each worker with health insurance. if a proposal would require all employers to give each worker health insurance, and as a result employeers costs increased by 5,000 and workers value these benefits by 15,000. therefore there will be lower monetary wages, firms will pay les

Equilibrium in a labor market with a monoposony employer

Please analyze how the equilibrium in a labor market with a monoposony employer changes if a minimum wage is set at the competitive level. Provide a well-labeled diagram with your answer, and be sure to analyze the effect on the marginal expenditure curve and compare the pre- and post-minimum wage equilibria. Thanks.

Concept of the Macro Economy

Here is what I need to get "smart" on: I need to discuss the concept of the macro economy. Specifically: 1. How do we define the total value of economic output and how do we measure it? 2. What are the major performance goals that we set for the economy, and how do we measure the performance? 3. Finally, discuss (i

Cobb Douglas

4. Consider an economy with the following Cobb-Douglas production function: Y = K1/3 L2/3. The economy has 1,000 units of capital and a labor force of 1,000 workers. a. What is the equation describing the demand for labor in this economy? (Hint: Review the appendix to Chapter 3.) b. If the real wage can adjust to equi

Using Economic Reasoning Power

Some economists did a study of the market for economists in Britain. They found that the quantity demanded was about 150 per year, and that the quantity supplied was about 300 per year. Using your new-found economic reasoning powers: - What did they predict would happen to the economists' salaries? - What likely happens to

Solutions to many macro economic problems

Please assist me with the following set of questions. Relevant diagrams are highly recommended. (Some of the questions are adapted from Mankiw 2003.) 1. a. Discuss with the aid of diagrams the short run effect on output, unemployment, general price level and interest rate with an increase in both consumption and investmen

What is the current U.S. umemployment rate?

Visit the Bureau of Labor Statics website, www.bls.gov/news.release/empsit.toc.htm, and select Employment Situation Summary. What month (and year) is summarized? What was the unemployment rate for that month? How does that rate compare with the rate in the previous month? What were the unemployment rates for adult men, adult

Product Curve

Suppose that you have drawn a total product curve for labor given a specific technology. Now let some sort of technological change increase the productivity of labor. A new total product curve would have to be drawn: A) above the old with a steeper slope for any level of employment greater than zero. B) above the old wit

Fed's policy

Since January of 2001 the Fed has reduced its Fed funds rate target from 6.5% to 1%. Nonetheless, the number of people at work is less than (and the unemployment rate higher than) when the Fed embarked on this expansionary monetary policy. Why hasn't the Fed's policy been more effective over the last 2.5 years in restoring stro

AS/AD Diagram

Assume the economy in March 2001 was exactly at full employment. Draw an AS/AD diagram representing the economy's "before" position in March 2001 and its "after" position in March 2002. Make sure your diagram illustrates a simultaneous increase in RGDP and the unemployment rate, with little overall change in the price level. Exp