The differences between the short run and the long run in macroeconomics .

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Answer 1

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

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3. Consider the market for paper. The process of producing paper creates pollution. Assume that the marginal damage function for pollution is given by: MDF = 3E where damages are measured in dollars and E is the level of emissions. Assume further that the function describing the marginal abatement cost of emissions is given by MAC 120-E where benefits are measured in dollars and E is the level of emissions. a. Graph the marginal damage function (MDF) and the marginal abatement cost function (MAC). b. What is the unregulated level of emissions Eu? What is the social welfare of this emissions level? c. Assume an existing emission quota limits emissions to E = 60. Show on the graph why this policy is inefficient. What is the deadweight loss caused by this policy?

show written calculation for B

Problem 1: 1. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 5%? 2. If a stock is expected to pay an annual dividend of $20 forever, what is the approximate present value of the stock, given that the discount rate is 8%? 3. If a stock is expected to pay an annual dividend of $20 this year, what is the approximate present value of the stock, given that the discount rate is 8% and dividends are expected to grow at a rate of 2% per year?

Answer 2

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

Answer 6

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.

Economics Concept Introduction

Concept introduction:

Short run: Short run refers to the time period which does not allow the change in capital to adjust with the market situation.

Long run: Long run refers to the time period which allows the change in capital to adjust with the market situation.

Answer 7

Chapter 36, Problem 1DQ

To determine

The differences between the short run and the long run in macroeconomics.

Answer 8

Expert Solution & Answer

Explanation of Solution

Differences between the short run and the long run in macroeconomics:

1. In the short run, input prices do not respond to the change in the price level. That is, input prices are inflexible. In the long run, however, input prices are flexible.

2. In the long run, the economy will adjust itself. That is, there is no need of government intervention. But in the short run, fiscal and monetary policies are required to stabilize the economy.

The distinction between the short run and the long run is important to have better analysis of short run and long run aspects.