The CARA and CRRA utility functions are both members of a more general class of utility functions called harmonic absolute risk aversion (HARA) functions. The general form for this function is where the various parameters obey the following restrictions: The reasons for the first two restrictions are obvious; the third is required so that U_ > 0.a. Calculate r (W) for this function. Show that […]

Suppose fairness is defined as those with the highest incomes can afford to pay a greater proportion of their income in taxes. Then which of the following taxation systems would be consistent with this notion of fairness? a. A true flat tax. b. A flat sales tax on consumption purchases. c. A progressive tax on income. d. A fixed federal tax of $5,000 that everyone […]

Using the aggregate expenditures model, assume the aggregate expenditures (AE) line is above the45-degree line at full-employment GDP. This vertical distance is called a (an) a. inflationary gap. b. recessionary gap. c. negative GDP gap. d. marginal propensity to consume gap.

Assume the economy is in recession and real GDP is below full employment. The marginal propensity to consume (MPC) is 0.80, and the government increases spending by $500 billion. As a result, aggregate demand will rise by a. zero. b. $2,500 billion. c. more than $2,500 billion. d. less than $2,500 billion.

How do you think the crisis of 2008 would have been mitigated if there had been no shadow banking sector but only the formal depository banking sector?   Q449: Describe the incentive problem facing the U.S. government in responding to the 2007–2009 crisis with respect to the shadow banking sector. How did the Dodd – Frank Act attempt to address those incentive problems?

Assume business investment spending is $10 billion when the interest rate is 2 percent. If the interest rate increases to 5 percent, investment spending will a. increase to over $10 billion. b. decrease to less than $10 billion. c. remain unchanged. d. remain unchanged until the interest rate reaches 5 percent and then investment spending increases.

7. Autonomous consumption is a. positively related to the level of consumption. b. negatively related to the level of consumption. c. positively related to the level of disposable income. d. independent of the level of disposable income.

Professor Econsmart teaches a course in principles of economics at a large university. This semester he has decided to enrich his lectures by adding a number of different techniques in addition to the standard lecture format; some of these techniques include: asking students to prepare a topic at home and present it in class, using simulations and “games” to show specific issues and ideas, employing […]

The program for speed control of a three-speed motor conveyor system is shown in Figure 15-52 and described in the text. Prepare an I/O connection diagram and ladder logic program that will simulate its operation. Utilize field devices found on your ControlLogix installation. Enter the program into the controller, and monitor its operation.

The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC=ATC. Copy the diagram and indicate the following: a. Optimal output b. Optimal price c. Total revenue d. Total cost e. Total monopoly profits f. Total “excess burden” or “welfare costs” of the monopoly (briefly […]

Use the aggregate expenditures model to demonstrate the multiplier effect. How are changes in the MPC, changes in the MPS, and the size of the multiplier related? Answer the following questions: a. What is the multiplier if the MPC is 0? 0.33?0.90? b. Suppose the equilibrium real GDP is $100 billion and the MPC is 4/5. How much will the equilibrium output change if businesses […]

Which parameter indicates the number of transitions of the counter rung? a) Count Up c) Preset b) Package_Counter d) Accum What is the counter’s tag name? a) Count Up c) Preset b) Package_Counter d) Accum

What advantage does eBay’s open bidding provide to sellers? Why? Which two of the following are most clearly common-value auction items: Viper sports cars, electricity, patent licenses, T-bills, antiques, or fine art?

In each of the following cases, state whether the monopolist would increase or decrease output: a. Marginal revenue exceeds marginal cost at the output produced. b. Marginal cost exceeds marginal revenue at the output produced.

The law of diminishing marginal utility exists for the first four units of a good if they have marginal utilities of a. 1, 2, 4, 8. b. 8, 4, 1, 2. c. 4, 8, 2, 1. d. 8, 4, 2, 1.

According to Keynesian theory, if equilibrium real GDP is below the full-employment level, then an increase in aggregate demand will result in which of the following changes in equilibrium? a. Real GDP will rise, but the price level will remain constant. b. Real GDP and the price level will both rise. c. Real GDP will remain unchanged but the price level will rise. d. None […]

In a perfectly competitive market, the demand curve for labor a. slopes upward. b. slopes downward because of diminishing marginal productivity. c. is perfectly elastic at the equilibrium wage rate. d. is described by all of the above.

In the short run, an increase in the price level causes which of the following a. A rightward shift in the aggregate demand curve. b. A leftward shift in the short-run aggregate supply curve. c. A rightward shift in the short-run aggregate supply curve. d. A movement upward along the short-run aggregate supply curve.

Macroeconomic equilibrium occurs when a. aggregate supply exceeds aggregate demand. b. the economy is at full employment. c. aggregate demand equals aggregate supply. d. aggregate demand equals the average price level.