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Suppose Korea’s industrial policies focus on modernizing plant and equipment, promoting innovation, and enhancing labor productivity. As a result, these policies cause an increase in the nation’s AS but not in AD. Assuming Korea has a fixed

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A country has had a steady value for its floating (stated inversely as the domestic currency price of foreign currency) for a number of years. The country now tightens up on (reduces) its money supply dramatically. The

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David is leaving on a three-day business trip. He has a meal allowance of $60. Let’s use X to stand for the amount he spends on food the first day, Y for the amount he spends the second day, and

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Try the following experiment: Flip a coin 50 times, keeping track of the results. Think of each “heads” as a small positive shock that increases output by one unit; similarly, think of each “tails” as a small negative shock that

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The Ascot Corporation, which produces stationery, hires a consultant to estimate its production function. The consultant concludes that
Q = 0.9P + 0.06L
where Q is the number of pounds of stationery produced by Ascot per year, L

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For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock and the policy response. Note: Assume the government responds by using monetary policy to stabilize output, unlike question 3, and assume the

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Luddites was a name given to a group of skilled textile workers (known as croppers) who, in the early 1800s in England, would break into textile mills and smash the new mechanized textile looms they feared would put them out

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Some firms want to be environmentally friendly, even if “greener” production processes increase their costs. Consider two scenarios. In the first scenario, a “green” firm such as a renewable energy company is producing electricity. This is the same good that

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Consider a market in which we have two firms, one of which will act as the Stackelberg leader and the other as the follower. As we know, this means that each firm will choose a quantity, X (for the leader)

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Suppose Juan’s preferences over goods X and Y can be expressed by the utility function U = 2X + Y, while Charlie’s preferences can be expressed by the utility function U = min (3X, 2Y). Suppose that Juan has 2