Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 1, Problem 3.5P
To determine
Drawback of statements.
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Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all:
13. What would happen to the net exports function in Europe and the US respectively if thedemand for dollars rises worldwide? Explain why.
20. Given the mathematical model below, solve for the expenditure multiplier for a) government
spending, G; and b) for consumer taxes, T. (medium difficulty)
Y=C+I+G
C=Co+b(Y-T)
1 = 10
T=To+tY
G = Go+gY
Use the Feynman technique throughout. Assume that you’re explaining the answer to someone who doesn’t know the topic at all:
11. What exactly is a rectangular hyperbola and what relevance is it to classical economics?
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- The figure to the right shows the economy initially in equilibrium at output Upper Y 0Y0. Suppose that the price level in the economy increases. Using the line drawing tool, show the impact this increase has on the AE curve. Properly label this line AE Subscript 1. Note: Carefully follow the instructions above and only draw the required object. According to your graph, the relationship between the price level and the level of aggregate output (income) is (indeterminate, positive, negative) --> pick one answer.picture is attached.arrow_forwardUse graph A on the right to determine what happens to the equilibrium values of the interest rate and output when there is an increasean increase in government spending (G) with the Fed changing the money supply (M Superscript S) by enough to keepby enough to keep interest rates constantinterest rates constant. 1.) Using the 3-point curved line drawing tool, illustrate the impact of the increaseincrease in G. Properly label your curve. 2.) Using the line drawing tool, illustrate the impact of the Fed's money supply decision. Properly label your curve. 3.) Using the point drawing tool, identify the economy's new equilibrium point. Use graph B on the right to determine what happens to the equilibrium values of the interest rate and output when there is anan increaseincrease in Upper GG with no change in the money supplythe money supply. 1.) Using either the 3-point curved line drawing tool to shift the IS curve or using the line drawing tool to shift the Fed rule…arrow_forwardSome economists argue that the "animal spirits" of investors are so important in determining the level of investment in the economy that interest rates do not matter at all. Part 2 a. Suppose that this were truelong dash—that investment in no way depends on interest rates. Using the line drawing tool, show what the investment curve would look like. Label the line 'I'. is my answer correct?arrow_forward
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