Consider the following misperceptions model of the economy.AD: Y = 600 + 10(M/P)SRAS: Y = 
+ P - PeOkun's Law: (Y - 
)/ 
= -2(u - 
)Let 
= 750, = 0.05, M = 600, and Pe = 40.(a)What is the price level?(b)Suppose there is an unanticipated increase in the nominal money
supply to 800. What is the short-run equilibrium level of output, the unemployment rate, and the price level?(c)When price expectations adjust fully, what is the price level?
What will be an ideal response?
| (a) | 40 |
| (b) | Y = 760, u = .0433, P = 50 |
| (c) | P = 53 1/3 |
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Joe's Garage operates in a perfectly competitive market. At the point where marginal cost equals marginal revenue, ATC = $20, AVC = $15, and the price per unit is $10 . In this situation,
a. Joe's Garage will break even b. Joe's Garage will shut down immediately c. the market price will fall in the long run d. Joe's supply curve will shift to the left e. Joe's Garage will suffer a loss in the short run, but stay in business
Which of the following is not a cost of decentralization of corporate decisionmaking?
A. More effective use of local knowledge B. Less effective use of central information C. Coordination costs and failures D. Incentive problems
A quota has all of the following impacts except:
A. generate revenues for government. B. create deadweight loss. C. drive up prices. D. help poorer countries.
The following table provides data for an economy in a certain year.Consumption expenditures50Imports40Government purchases of goods and services20Construction of new homes and apartments30Sales of existing homes and apartments40Exports50Government payments to retirees10Household purchases of durable goods20Beginning-of-year inventory10End-of-year inventory20Business fixed investment30Given the data in the table, compute the investment component of GDP.
A. 40 B. 60 C. 30 D. 70