Q: In the Solow model, population growth leads to steady-state
In the Solow model, population growth leads to steady-state growth in total output, but not in output per worker. Do you think this would still be true if the production function exhibited increasing...
See AnswerQ: This question asks you to analyze in more detail the two-
This question asks you to analyze in more detail the two-sector endogenous growth model presented in the text. a. Rewrite the production function for manufactured goods in terms of output per effectiv...
See AnswerQ: Use the IS–LM diagram to describe both the short-
Use the IS–LM diagram to describe both the short-run effects and the long-run effects of the following changes on national income, the interest rate, the price level, consumption, investment, and real...
See AnswerQ: Suppose that money demand depends on disposable income, so that the
Suppose that money demand depends on disposable income, so that the equation for the money market becomes M/P = L(r, Y - T ). Analyze the short-run impact of a tax cut in a small open economy on the e...
See AnswerQ: Suppose that an economy has the Phillips curve π = π
Suppose that an economy has the Phillips curve π = π-1 - 0.5(u - un) and that the natural rate of unemployment is given by an average of the past two years’ unemployment: un = 0.5(u-1 + u-2). a. Why...
See AnswerQ: The text assumes that the natural rate of interest r is a
The text assumes that the natural rate of interest r is a constant parameter. Suppose instead that it varies over time, so now it has to be written as rt. a. How would this change affect the equation...
See AnswerQ: Use the Keynesian cross to explain why fiscal policy has a multiplied
Use the Keynesian cross to explain why fiscal policy has a multiplied effect on national income.
See AnswerQ: A Case Study in the chapter indicates that the elderly do not
A Case Study in the chapter indicates that the elderly do not dissave as much as the life-cycle model predicts. a. Describe the two possible explanations for this phenomenon. b. One study found that t...
See AnswerQ: U.S. tax laws encourage investment in housing (such
U.S. tax laws encourage investment in housing (such as through the deductibility of mortgage interest for purposes of computing taxable income) and discourage investment in business capital (such as t...
See AnswerQ: Give three reasons that a budget deficit might be a good policy
Give three reasons that a budget deficit might be a good policy choice.
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