Macroeconomics (7th Edition)
Macroeconomics (7th Edition)
7th Edition
ISBN: 9780134738314
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 12, Problem 12.3.8PA
To determine

The shedding of unwanted inventories.

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How might the following events affect the real gross domestic product (GDP) and what would happen to economic well-being in each case? Briefly explain. The government of Pakistan decides a lockdown in the economy for an indefinite period of time. The discovery of high yielding variety (HYV) seeds improves farm harvests. Goods transporters observe strike in the economy. Small and Medium Size Enterprises (SMEs) experience subdued demand causing them to lay off employees. Suppose the parliament of Pakistan passes new environmental laws that restrict firms from using production techniques that cause pollution. A large number of people join university as full-time students.
Briefly describe the difference between a so-called real business cycle and a more traditional “spending” business cycle.
An article in The Economist magazine noted that 'the economy's potential to supply goods and services [is] determined by such things as the labour force and capital stock, as well as inflation expectations'. Do you agree with this list of the determinants of potential GDP? Briefly explain.

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Macroeconomics (7th Edition)

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