Macroeconomic instability.

Question

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Answer 1

Question

Chapter 39, Problem 1DQ

To determine

Macroeconomic instability.

Expert Solution & Answer

Explanation of Solution

In economics, the mainstream of macroeconomic instability is Keynesian-based and it focuses on aggregate spending and its components. Changes in investment spending are significant and lead to changes in the aggregate supply, occasionally, and adverse supply shocks which change the aggregate demand.

Investment spending refers to wide variation and a ‘multiplier effect’ that expands these changes into greater amount in aggregate demand; these can cause demand pull inflation in the forward direction or a recession. A mainstream view of instability could arise on the supply side; it leads to decreases in a nation’s aggregate supply which may threaten the economy by simultaneous causing cost push inflation or recession.

Economics Concept Introduction

Concept introduction:

Demand pull inflation: Demand pull inflation refers to increasing price due to increasing the aggregate demand.

Cost push inflation: Cost push inflation refers to increasing price due to increasing the cost of production.

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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 39, Problem 1DQ

To determine

Macroeconomic instability.

Expert Solution & Answer

Explanation of Solution

In economics, the mainstream of macroeconomic instability is Keynesian-based and it focuses on aggregate spending and its components. Changes in investment spending are significant and lead to changes in the aggregate supply, occasionally, and adverse supply shocks which change the aggregate demand.

Investment spending refers to wide variation and a ‘multiplier effect’ that expands these changes into greater amount in aggregate demand; these can cause demand pull inflation in the forward direction or a recession. A mainstream view of instability could arise on the supply side; it leads to decreases in a nation’s aggregate supply which may threaten the economy by simultaneous causing cost push inflation or recession.

Economics Concept Introduction

Concept introduction:

Demand pull inflation: Demand pull inflation refers to increasing price due to increasing the aggregate demand.

Cost push inflation: Cost push inflation refers to increasing price due to increasing the cost of production.

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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 39, Problem 1DQ

To determine

Macroeconomic instability.

Expert Solution & Answer

Explanation of Solution

In economics, the mainstream of macroeconomic instability is Keynesian-based and it focuses on aggregate spending and its components. Changes in investment spending are significant and lead to changes in the aggregate supply, occasionally, and adverse supply shocks which change the aggregate demand.

Investment spending refers to wide variation and a ‘multiplier effect’ that expands these changes into greater amount in aggregate demand; these can cause demand pull inflation in the forward direction or a recession. A mainstream view of instability could arise on the supply side; it leads to decreases in a nation’s aggregate supply which may threaten the economy by simultaneous causing cost push inflation or recession.

Economics Concept Introduction

Concept introduction:

Demand pull inflation: Demand pull inflation refers to increasing price due to increasing the aggregate demand.

Cost push inflation: Cost push inflation refers to increasing price due to increasing the cost of production.

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 4

Question

Chapter 39, Problem 1DQ

To determine

Macroeconomic instability.

Expert Solution & Answer

Explanation of Solution

In economics, the mainstream of macroeconomic instability is Keynesian-based and it focuses on aggregate spending and its components. Changes in investment spending are significant and lead to changes in the aggregate supply, occasionally, and adverse supply shocks which change the aggregate demand.

Investment spending refers to wide variation and a ‘multiplier effect’ that expands these changes into greater amount in aggregate demand; these can cause demand pull inflation in the forward direction or a recession. A mainstream view of instability could arise on the supply side; it leads to decreases in a nation’s aggregate supply which may threaten the economy by simultaneous causing cost push inflation or recession.

Economics Concept Introduction

Concept introduction:

Demand pull inflation: Demand pull inflation refers to increasing price due to increasing the aggregate demand.

Cost push inflation: Cost push inflation refers to increasing price due to increasing the cost of production.

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

Answer 5

Chapter 39, Problem 1DQ

To determine

Macroeconomic instability.

Expert Solution & Answer

Explanation of Solution

In economics, the mainstream of macroeconomic instability is Keynesian-based and it focuses on aggregate spending and its components. Changes in investment spending are significant and lead to changes in the aggregate supply, occasionally, and adverse supply shocks which change the aggregate demand.

Investment spending refers to wide variation and a ‘multiplier effect’ that expands these changes into greater amount in aggregate demand; these can cause demand pull inflation in the forward direction or a recession. A mainstream view of instability could arise on the supply side; it leads to decreases in a nation’s aggregate supply which may threaten the economy by simultaneous causing cost push inflation or recession.

Economics Concept Introduction

Concept introduction:

Demand pull inflation: Demand pull inflation refers to increasing price due to increasing the aggregate demand.

Cost push inflation: Cost push inflation refers to increasing price due to increasing the cost of production.

Answer 6

Chapter 39, Problem 1DQ

To determine

Macroeconomic instability.

Expert Solution & Answer

Explanation of Solution

In economics, the mainstream of macroeconomic instability is Keynesian-based and it focuses on aggregate spending and its components. Changes in investment spending are significant and lead to changes in the aggregate supply, occasionally, and adverse supply shocks which change the aggregate demand.

Investment spending refers to wide variation and a ‘multiplier effect’ that expands these changes into greater amount in aggregate demand; these can cause demand pull inflation in the forward direction or a recession. A mainstream view of instability could arise on the supply side; it leads to decreases in a nation’s aggregate supply which may threaten the economy by simultaneous causing cost push inflation or recession.

Economics Concept Introduction

Concept introduction:

Demand pull inflation: Demand pull inflation refers to increasing price due to increasing the aggregate demand.

Cost push inflation: Cost push inflation refers to increasing price due to increasing the cost of production.

Answer 7

Chapter 39, Problem 1DQ

To determine

Macroeconomic instability.

Answer 8

Expert Solution & Answer

Explanation of Solution

In economics, the mainstream of macroeconomic instability is Keynesian-based and it focuses on aggregate spending and its components. Changes in investment spending are significant and lead to changes in the aggregate supply, occasionally, and adverse supply shocks which change the aggregate demand.

Investment spending refers to wide variation and a ‘multiplier effect’ that expands these changes into greater amount in aggregate demand; these can cause demand pull inflation in the forward direction or a recession. A mainstream view of instability could arise on the supply side; it leads to decreases in a nation’s aggregate supply which may threaten the economy by simultaneous causing cost push inflation or recession.