Solved Questions

1. Uncertainty Assume the business-as-usual level of pollution from a group of firms is E = 15 (and this is known with certainty). In addition, assume it is known that the marginal social benefit of reducing X units of pollution from the business-as-usual level is given by MSB(X) = 30 - 2X In contra...

1. Other things equal, what is the likely impact of a U.S. trade deficit on 1) the current account? 2) foreign savings if domestic investment is greater than domestic saving? 3) foreign savings if domestic investment is less than domestic saving? 2. Official reserve transactions are necessary to "ba...

1. Suppose that we observe most janitors with red hair earn $8 per hour and most janitors with brown hair earn $6 per hour. The National Organization for Equality (NOE) also notices and holds a press conference decrying the lack of wage equality in the janitorial profession. Suppose that you take a ...

Assume a place called Willville is in recession. Congress decides to pass a bill in hopes of increasing real GDP by $300 billion. With an mpc=0.8: a. By what amount would the necessary change in government expenditures need to be to accomplish this goal? b. By what amount would the necessary change ...

As a member of the Federal Reserve, how would you stabilize an economy suffering from high unemployment using FOMC tools? Please provide impact to money supply, interest rates and AD. Include graphs as applicable. (Your short answer questions will most likely require graphs.)