Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter1: Welcome To Economics!
Section: Chapter Questions
Problem 26CTQ: Suppose, as an economist, you are asked to analyze an issue unlike anything you have ever done...
Related questions
Question
![(a) Because ideas are "non-rival" goods, inventors have little economic incentives to invent
since they cannot prevent others from copying their ideas. Do you agree? Discuss.
(b) In the real world there is evidence that economies tend to "converge conditionally" (that
is, there is "conditional convergence") but not that they tend to "converge absolutely"
(that is, there is no "absolute convergence“).
(c) In the Keynesian model, a sudden increase in money DEMAND causes a recession. Do
you agree? Explain using the IS/LM model
(d) Imagine that, instead of using the traditional assumption that "output is demand
determined" we assume that "output is determined by the short side of the market"
(that is, for interest rates for which supply is smaller than demand, output is
determined by supply; and for interest rates for which demand is smaller than supply,
output is determined by demand). Starting from a position of equilibrium between
demand and supply, what would be the effects of an increase in money supply?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F53b3af1e-c2fe-4b64-9d06-accae5ddaf7d%2F3a45c8b8-05a5-46ed-83e1-ec93aa8c6f08%2F289sig_processed.png&w=3840&q=75)
Transcribed Image Text:(a) Because ideas are "non-rival" goods, inventors have little economic incentives to invent
since they cannot prevent others from copying their ideas. Do you agree? Discuss.
(b) In the real world there is evidence that economies tend to "converge conditionally" (that
is, there is "conditional convergence") but not that they tend to "converge absolutely"
(that is, there is no "absolute convergence“).
(c) In the Keynesian model, a sudden increase in money DEMAND causes a recession. Do
you agree? Explain using the IS/LM model
(d) Imagine that, instead of using the traditional assumption that "output is demand
determined" we assume that "output is determined by the short side of the market"
(that is, for interest rates for which supply is smaller than demand, output is
determined by supply; and for interest rates for which demand is smaller than supply,
output is determined by demand). Starting from a position of equilibrium between
demand and supply, what would be the effects of an increase in money supply?
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![Principles of Economics 2e](https://www.bartleby.com/isbn_cover_images/9781947172364/9781947172364_smallCoverImage.jpg)
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Survey Of Economics](https://www.bartleby.com/isbn_cover_images/9781337111522/9781337111522_smallCoverImage.gif)
![Principles of Economics 2e](https://www.bartleby.com/isbn_cover_images/9781947172364/9781947172364_smallCoverImage.jpg)
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
![Micro Economics For Today](https://www.bartleby.com/isbn_cover_images/9781337613064/9781337613064_smallCoverImage.gif)
![Survey Of Economics](https://www.bartleby.com/isbn_cover_images/9781337111522/9781337111522_smallCoverImage.gif)