ECON MACRO
ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 15, Problem 4.11P
To determine

The reasons for quantitative easing by the federal reserve by purchasing two trillion of financial assets, The way these purchases are reflected on Fed’s balance sheet and The reason that this quantitative easing did not increase the rate of inflation till 2015.

Concept Introduction:

Quantitative easing is similar to increase in money supply in the economy. Quantitative easing is an expansion of the open market operations by the Federal Reserve to stimulate the economy and making it easier for the businesses to borrow money. The financial crisis in the U.S. in 2007 due to the sub-prime mortgages led to the Federal Reserve to carry out quantitative easing.

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"Whether the regulator sells or gives away tradeable emission permits free of charge, the quantities of emissions produced by firms are the same." Assume that there are n identical profit-maximising firms where profit for each firm is given by π(e) with л'(e) > 0; π"(e) < 0 and e denotes emissions. Individual emissions summed over all firms gives E which generates environmental damages D(E). Show that the regulator achieves the optimal level of total pollution through a tradeable emission permit scheme, where the permits are distributed according to the following cases: Case (i) the firm purchases all permits; Case (ii) the firm receives all permits free; and Page 3 of 5 ES30031 Case (iii) the firm purchases a portion of its permits and receives the remainder free of charge.
compare and/or contrast the two plays we've been reading, Antigone and A Doll's House.
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