Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Question
Chapter 21, Problem 5E
To determine
(a)
To explain:
According to the utility analysis, the statement that "I couldn't eat another bite".
To determine
(b)
To explain:
According to the utility analysis,the statement that "I'll never get tired of cooking".
To determine
(c)
According to the utility analysis,the statement that "The last drop tastes as good as the first."
To determine
(d)
According to the utility analysis,the statement that "I wouldn't eat broccoli if you paid me".
To determine
(e)
According to the utility analysis,the statement that "My kid will eat nothing but junk food if I allowed her."
To determine
(f)
According to the utility analysis,the statement that "Any job worth doing is worth doing well."
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Use 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…
Some 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?
Problem 3
ABC Challenges: Attrition, Balance and Compliance
Can television inform people about public affairs? Political scientists Bethany Albertson and
Adria Lawrence (2009) conducted an experiment in which they randomly assigned people to
treatment and control groups to evaluate the effect of watching TV on a person's information
level. Those assigned to the treatment group were told to watch a specific television
broadcast and were later asked questions related to what they watched. Those in the control
group were not shown the TV broadcast but were asked questions related to the material in
the TV broadcast.
The dataset contains the following variables:
•
•
•
•
•
•
Read News: Dummy variable which =1 if a person reads news and 0 otherwise.
Political Interest: interest in political affairs (not interested=1 to very
interested=4)
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