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7. Suppose a shock hits the economy that abides by a Classical model and you observe...
5. Consider a simple economy with two companies: Fresh Juice, and Organic Oranges. Organic Oranges do...
5. Consider a simple economy with two companies: Fresh Juice, and Organic Oranges. Organic Oranges do not sell oranges directly to consumer; rather it supplies its entire harvest to Fresh Juice as an intermediate good. Fresh Juice sells its juice directly to consumers. As juice is perishable, juice produced in Q1 cannot be sold in Q2. Suppose Fresh Juice produced 2,000 gallons of juice in Q1. The two inputs used were oranges, which cost $10,000 total, and labor, which cost...
11. Consider an economy that abides by the standard classical model specifications. Suppose the economy experiences...
11. Consider an economy that abides by the standard classical model specifications. Suppose the economy experiences an earthquake that destroys a large amount of capital in the econ- omy (assume the population in unaffected and thus remains constant). Using graphs and written discussion, examine the economy dynamics in the wake of the shock Expectations are as follows: . Capture the timing in your written discussion If a curve shifts, explain why/economic intuition . If a market is in disequilibrium, explain...
9. Consider a Classical model with the following specifications in Q1, 2019: . Labor Supply: NS-1%,...
9. Consider a Classical model with the following specifications in Q1, 2019: . Labor Supply: NS-1%, Cobb-Douglas Production Function . The Quantity Theory of Money accurately describes aggregate demand, The Theory of Distribution holds, Parameter values: [y, a, A, K, M, V] [30,0.3, 130, 500, 2500,40]. Suppose a reduction in labor law regulations leads to an outward shift in labor supply, represented as an increase in y from 30 to 32 during Q2, 2019. Assume that everything else stays the...
Question 2 (40 points) Based on Classical model of labor market, how would each of the...
Question 2 (40 points) Based on Classical model of labor market, how would each of the following events affect full employment and the equilibrium real wage in the U.S.? Your answer should include graphs. A. (8 pts.) A large number of working-age immigrants enter the U.S. B. (8 pts.) Tighter environmental laws temporarily reduce the capital stock. (Assume that the effect on the MPN is the standard one.) C. (8 pts.) Workers start attending night school, which makes their expected...
How will shift right in supply affect equilibrium price, assuming demand remains constant? a. increase b....
How will shift right in supply affect equilibrium price, assuming demand remains constant? a. increase b. decrease c.will not affect it d. cannot be determined According to the law of demand, if the price of a good decreases, its Qd? a. decreases b. increases c. goes to zero d. stays constant According to the income effect, price changes equal changes in? a. money income b.real income c.demand d. utility on the demand curve a chance in price leads a. no...
7) An invention that raises the future marginal product of capital in a closed economy) would...
7) An invention that raises the future marginal product of capital in a closed economy) would cause an increase in desired investment, which would cause the investment curve to shift to the and would cause the real interest rate to A) right; increase B) right; decrease C) left: increase D) left: decrease 8) Over the past year, output grew 4%, capital grew 2%, and labor grew 1%. If the elasticities of output with respect to capital and labor are 0.3...
Consider a closed economy operating according to the Classical model. The production function is: Y =...
Consider a closed economy operating according to the Classical
model. The production function is: Y = 40K^0:75L^0:25
Problem 1- Use the following information o answer questions 24 29 Consider a closed economy operating acoording to the Classical model. The production function is: 40K0.75し0.25 where K and L are the capital and labor used in the production of output Y The consumption and investment functions are: C 100 +0.8(Y-T) 1 = 1,450-20r where T is the amount of taxes and r...
1. If demand deceases and supply remains constant, what happens to the market equilibrium? A. Quantity...
1. If demand deceases and supply remains constant, what happens to the market equilibrium? A. Quantity and price both rise. B. neither price or quantity will change C. Quantity and price both fall. D. Quantity rises and price falls. 2. A positive statement is A. an opinion B. a value judgement. C. can be shown to be correct or incorrect. D. based upon what can be demonstrated to be true. 3. If a technology change reduces a company's production costs,...
If an economy has aggregate price levels that are increasing, but the wage rate stays the...
If an economy has aggregate price levels that are increasing, but the wage rate stays the same because of downward wage stickiness, what would be the economic consequences? New businesses would enter the economy, hire employees and as a consequence the quantity of real GDP supplied would increase. Business would fire some employees as labor becomes too expensive and the quantity of real GDP supplied would decrease. Business would need to hire more employees and the quantity of real GDP...
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of...
7. Suppose that Canada imposes an import quota on automobiles. In the open-economy macroeconomic model, which of the following curves would this quota shift? a. supply of loanable funds left b. demand for loanable funds left c. demand for Canadian dollars right d. supply of Canadian dollars left 8. Suppose the Canadian government imposed import quotas on agricultural products. According to the foreign-currency exchange market diagram, which of the following outcomes would most likely result? a. Both the demand and supply curves...
5. Consider a simple economy with two companies: Fresh Juice, and Organic Oranges. Organic Oranges do not sell oranges directly to consumer; rather it supplies its entire harvest to Fresh Juice as an intermediate good. Fresh Juice sells its juice directly to consumers. As juice is perishable, juice produced in Q1 cannot be sold in Q2. Suppose Fresh Juice produced 2,000 gallons of juice in Q1. The two inputs used were oranges, which cost $10,000 total, and labor, which cost...
11. Consider an economy that abides by the standard classical model specifications. Suppose the economy experiences an earthquake that destroys a large amount of capital in the econ- omy (assume the population in unaffected and thus remains constant). Using graphs and written discussion, examine the economy dynamics in the wake of the shock Expectations are as follows: . Capture the timing in your written discussion If a curve shifts, explain why/economic intuition . If a market is in disequilibrium, explain...
9. Consider a Classical model with the following specifications in Q1, 2019: . Labor Supply: NS-1%, Cobb-Douglas Production Function . The Quantity Theory of Money accurately describes aggregate demand, The Theory of Distribution holds, Parameter values: [y, a, A, K, M, V] [30,0.3, 130, 500, 2500,40]. Suppose a reduction in labor law regulations leads to an outward shift in labor supply, represented as an increase in y from 30 to 32 during Q2, 2019. Assume that everything else stays the...
Question 2 (40 points) Based on Classical model of labor market, how would each of the following events affect full employment and the equilibrium real wage in the U.S.? Your answer should include graphs. A. (8 pts.) A large number of working-age immigrants enter the U.S. B. (8 pts.) Tighter environmental laws temporarily reduce the capital stock. (Assume that the effect on the MPN is the standard one.) C. (8 pts.) Workers start attending night school, which makes their expected...
7) An invention that raises the future marginal product of capital in a closed economy) would cause an increase in desired investment, which would cause the investment curve to shift to the and would cause the real interest rate to A) right; increase B) right; decrease C) left: increase D) left: decrease 8) Over the past year, output grew 4%, capital grew 2%, and labor grew 1%. If the elasticities of output with respect to capital and labor are 0.3...
Consider a closed economy operating according to the Classical
model. The production function is: Y = 40K^0:75L^0:25
Problem 1- Use the following information o answer questions 24 29 Consider a closed economy operating acoording to the Classical model. The production function is: 40K0.75し0.25 where K and L are the capital and labor used in the production of output Y The consumption and investment functions are: C 100 +0.8(Y-T) 1 = 1,450-20r where T is the amount of taxes and r...
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