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Discuss the difficulties of using aggregate demand management to moderate business cycles
Following the oil price shocks of the 1970s, Keynesians concede that supply shocks can cause recessions, but it is not the main source of recessions. Discuss.
suppose that GDP is 40 billion below its potential level. It is expected that next period GDP will be 20 billion below potential and that two periods from now it will be back at its potential level. You are told that the multiplier for government spending is 2 and that the effects of the increased government spending are immediate. What policy actions can be taken to put GDP back on target each period?
In today’s economy, it’s harder for workers to get promoted. In 2006, it took an average
of 2 ½ years to get a promotion; today it takes 4 ½ years. As a result, fewer workers are willing
to boost their productivity in an effort to impress the boss and get the promotion. In 2006, 25
percent of employees said they were willing to give “an extra oomph” at work (boost their
productivity); today about 15 percent are willing to do so. Explain the connection to the Phillips
curve.
Suppose government purchases increase to 1000, what is the new equilibrium income and consumption? (4 Marks)
v. What is the new fiscal deficit/surplus after government spending increases to 1000?
The population in country C decreases, due to a lower birth rate. At the same time, there is an increase in the cost of fertilizer, which is used to grow vegetables. Explain how the market for vegetables will be affected by these changes. Clearly indicate how the equilibrium price and equilibrium quantity will be affected by these changes. Make use of a combination of diagrams and verbal explanation to explain your answer. Note that your diagrams should be properly annotated and that marks will be deducted for any missing labels on your diagram.
). In today’s economy, it’s harder for workers to get promoted. In 2006, it took an average
of 2 ½ years to get a promotion; today it takes 4 ½ years. As a result, fewer workers are willing
to boost their productivity in an effort to impress the boss and get the promotion. In 2006, 25
percent of employees said they were willing to give “an extra oomph” at work (boost their
productivity); today about 15 percent are willing to do so. Explain the connection to the Phillips
curve.
Demand for a soft book managerial economics text is given by Q = 20,000 – 300P. the book is initially priced at $30.
a. Compute the point price elasticity of demand at P = $30
b. If the objective is to increase total revenue, should the price be increased or decreased? Explain.
For the given demand equation Qd=30-2p. Calculate the inverse of the demand equation, Average Revenue, Total Revenue and Marginal Revenue
b) You are trying to decide whether to take a vacation. Most of the costs of the vacation (airfare, hotel, and forgone wages) are measured in dollars, but the benefits of the vacation are psychological. How can you compare the benefits to the costs?
What happens to the demand curve of normal goods (draw an appropriate graph) in each of these cases?
a) The Bhutan population grows 0.5% in 2020?
b) An economy XYZ slides into recession in 2019, leading to a fall in real incomes
