Economics Answers

The full effect of fiscal policy may not be realized if not matched with changes in monetary policy, explain using the IS/LM model

An open macroeconomic model for a hypothetical economy is represented as follows
Y= C0 +Io+Go+X0-M, M=mo+m1yd,C=co+c1yd, T=tY and Yd=Y-T
a. Show that equal change in tax and government expenditure are expansionary to the economy
b. Derive the equilibrium level of savings in the economy above
c. Derive the investment multiplier

If: Y = C + I where C = 120 + 0.8Y, I = 200 + 0.05i and Y = 1400,
Q1. Compute the equilibrium national income, consumption and investments
Q2. What is the size of government expenditure multiplier and savings ?

if: C = 120 + 0.8Y, I = 200 + 0.05i and Y = 1400, What is the size of government expenditure multiplier and savings?

at L=4, K=4, the marginal product of labor is 2 and the marginal product of capital is 3. what is the rate of technical substitution?

to produce a recorded CD, q=1, the firm uses one blank disk, D=1 and the service of a recording machine M=1 for one hour.
a) draw an isoquant for this production process
b) explain the reason for its shape.

Assume that a firm hires only labour and capital to produce bicycles

Explain the cost minimization rule for this firm and why this rule is logical

Suppose that the firm hires 100 units of capital and 500 units of labour and that the MPl is 20 while MPk is 25. If a unit of labour costs $4.00 and a unit of capital costs $5.00, is the firm minimizing costs?
Explain

If the price of capital falls to $4.00 what should the firm do to minimize cost? Explain why your answer is consistent with the cost minimization rule.

Assume that the banking system is loaned up and that any open-market purchase by the Fed directly increases reserves in the banks. If the required reserve ratio is 0.2, by how much could the money supply expand if the Fed purchased $2 billion worth of bonds?

Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate.
An economy that is open to capital flows has two channels for the monetary transmission mechanism, while an economy closed to capital flows has only one. [Hint: Explain in the context of an increase in interest rates in both types of economies.]

Explain why each of the following statements is True, False, or Uncertain according to economic principles. Use diagrams where appropriate.
Because it is no longer backed by the potential for conversion to gold, modern Canadian fiat currency is no longer able to serve as a form of money.

Write-Right, Inc. is a vertically integrated firm that produces both paper and writing tablets. The demand for tablets is given by:

PT = 1.00 - 0.001QT

where QT is the quantity of tablets produced. The marginal cost of producing the paper necessary for each tablet is:

MC = 0.20 + 0.001QT

It costs $0.10 to make the paper into a writing tablet. If there is no external market for the paper, what transfer price should top management set for the paper?