PRINCIPLES OF MACROECONOMICS
2nd Edition
ISBN: 9781506699882
Author: Taylor
Publisher: XANEDU PUBLISHING
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Textbook Question
Chapter 11, Problem 46CTQ
Hydraulic fracturing (tracking) has the potential to significantly increase the amount of natural gas produced in the United States. If a large percentage of factories and utility companies use natural gas, what will happen to output, the
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CEO Salary and Firm SalesWe can estimate a constant elasticity model relating CEO salary to firm sales. The data set is the same one used in Example 2.3, except we now relate salary to sales. Let sales be annual firm sales, measured in millions of dollars. A constant elasticity model is[2.45]ßßlog (salary) = ß0 + ß0log (sales) + u,where ß1 is the elasticity of salary with respect to sales. This model falls under the simple regression model by defining the dependent variable to be y = log(salary) and the independent variable to be x = log1sales2. Estimating this equation by OLS gives[2.46]log (salary)^=4.822 + 0.257 (sales) n = 209, R2 = 0.211.The coefficient of log(sales) is the estimated elasticity of salary with respect to sales. It implies that a 1% increase in firm sales increases CEO salary by about 0.257%—the usual interpretation of an elasticity.
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Chapter 11 Solutions
PRINCIPLES OF MACROECONOMICS
Ch. 11 - Describe the mechanism by which supply creates its...Ch. 11 - Describe the mechanism by which demand creates its...Ch. 11 - The short run aggregate supply curve was...Ch. 11 - In the AD/AS model, what prevents the economy from...Ch. 11 - Suppose the U.S. Congress passes significant...Ch. 11 - Suppose concerns about the size of the federal...Ch. 11 - How would a dramatic increase in the value of the...Ch. 11 - Suppose Mexico, one of our largest trading...Ch. 11 - A policymaker claims that tax cuts led the economy...Ch. 11 - Many financial analysts and economists eagerly...
Ch. 11 - What impact would a decrease in the size of the...Ch. 11 - Suppose, after five years of sluggish growth, the...Ch. 11 - Suppose the Federal Reserve begins to Increase the...Ch. 11 - If the economy is operating in the neoclassical...Ch. 11 - If the economy is operating In the Keynesian zone...Ch. 11 - What is says law?Ch. 11 - What is Keynes; law?Ch. 11 - Do neoclassical economists believe in Keynes law...Ch. 11 - Does Says law apply more accurately in the long...Ch. 11 - What is on the horizontal axis of the AD/AS...Ch. 11 - What is the economic reason why the SRAS curve...Ch. 11 - What are the components of the aggregate demand...Ch. 11 - What are the economic reasons why the AD curve...Ch. 11 - Briefly explain the reason for the near-horizontal...Ch. 11 - Briefly explain the reason for the near-vertical...Ch. 11 - What is potential GDP?Ch. 11 - Name some factors that could cause the SRAS curve...Ch. 11 - Will the shift of SRAS to the right tend to make...Ch. 11 - What is stagflation?Ch. 11 - Name some factors that could cause AD to shift,...Ch. 11 - Would a shift of AD to the right tend to make the...Ch. 11 - How is long-term growth illustrated in an AD/AS...Ch. 11 - How is recession illustrated in an AD/AS model?Ch. 11 - How is cyclical unemployment illustrated in an...Ch. 11 - How is the natural rate of unemployment...Ch. 11 - How is pressure for inflationary price increases...Ch. 11 - What are some of the ways in which exports and...Ch. 11 - What is the Keynesian zone of the SRAS curve? How...Ch. 11 - What is the neoclassical zone of the SRAS curve?...Ch. 11 - What is the intermediate zone of the SRAS curve?...Ch. 11 - Why would an economist choose either the...Ch. 11 - On a microeconomic demand curve, a decrease in...Ch. 11 - Economists expect that as the labor market...Ch. 11 - If new government regulations require firms to use...Ch. 11 - During spring 2016 the Midwestern United States,...Ch. 11 - Hydraulic fracturing (tracking) has the potential...Ch. 11 - Some politicians have suggested tying the minimum...Ch. 11 - If households decide to save a larger portion of...Ch. 11 - If firms become more optimistic about the future...Ch. 11 - If Congress cuts taxes at the same time that...Ch. 11 - Suppose the level of structural unemployment...Ch. 11 - If foreign wealth-holders decide that the United...Ch. 11 - The AD/AS model is static. It shows a snapshot of...Ch. 11 - Explain why the short-run aggregate supply curve...Ch. 11 - Explain why the short-run aggregate supply curve...Ch. 11 - Why might it be important for policymakers to know...Ch. 11 - In your view, is the economy currently operating...Ch. 11 - Are Says law and Keynes law necessarily mutually...Ch. 11 - Review the problem in the Work It Out titled...Ch. 11 - The imaginary country of Harris Island has the...Ch. 11 - Table 24.4 describes Santhers economy. Plot the...
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