Samuelson and Solow reasoned that when aggregate demand was low, unemployment was

a. high, so there was upward pressure on wages and prices.

b. high, so there was downward pressure on wages and prices.

c. low, so there was upward pressure on wages and prices.

d. low, so there was downward pressure on wages and prices

Suppose an economy is in long-run equilibrium a. Use the model of aggregate demand and aggregate supply to illustrate the initial equilibrium (call it point A). Be sure to include both short-run and long-run aggregate supply. b. The central bank raises the money supply by 5 percent. Use your diagram to show what happens to output and the price level as the economy moves from the initial to the new short-run equilibrium (call it point B). c. Now show the new long-run equilibrium (call it point C). What causes the economy to move from point B to point C? d. According to the sticky-wage theory of aggregate supply, how do nominal wages at point A compare to nominal wages at point B? How do nominal wages at point A compare to nominal wages at point C? e. According to the sticky-wage theory of aggregate supply, how do real wages at point A compare to real wages at point B? How do real wages at point A compare to real wages at point C? f. Judging by the impact of the money supply on nominal and real wages, is this analysis consistent with the proposition that money has real effects in the short run but is neutral in the long run?

On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for$2,000. During the first year, the band performs 45 concerts.

Compute the first-year depreciation using the straight-line method.

Consider an economy described by the following equations:

$$\begin{aligned} Y &=C+I+G \\ C &=100+0.75(Y-T) \\ I &=500-50 r \\ G &=125 \\ T &=100 \end{aligned}$$

where Y is GDP, C is consumption, I is investment, G is government purchases, T is taxes, and r is the interest rate. If the economy were at full employment (that is, at its natural level of output), GDP would be 2,000.

Explain the meaning of each of these equations.

Flo Choi owns a small business and manages its accounting. Her company just finished a year in which a large amount of borrowed funds was invested in a new building addition as well as in equipment and fixture additions. Choi’s banker requires her to submit semiannual financial statements so he can monitor the financial health of her business. He has warned her that if profit margins erode, he might raise the interest rate on the borrowed funds to reflect the increased loan risk from the bank’s point of view. Choi knows profit margin is likely to decline this year. As she prepares year-end adjusting entries, she decides to apply the following depreciation rule: All asset additions are considered to be in use on the first day of the following month. (The previous rule assumed assets are in use on the first day of the month nearest to the purchase date.) 1. Identify decisions that managers like Choi must make in applying depreciation methods. 2. Is Choi’s rule an ethical violation, or is it a legitimate decision in computing depreciation? 3. How will Choi’s new depreciation rule affect the profit margin of her business?

An increase in the money supply will lead to which of the following in the short run? A. higher interest rates B. decreased investment spending C. decreased consumer spending D. increased aggregate demand E. lower real GDP

To decrease the money supply, the Fed could ?

a. sell government bonds.

b. increase the discount rate.

c. increase the reserve requirement.

d. All of the above are correct.

Consider an economy described by the following equations:

$$\begin{aligned} &Y=C+I+G \\ &C=100+0.75(Y-T) \\ &I=500-50 r \\ &G=125 \\ &T=100 \end{aligned}$$

where Y is GDP, C is consumption, I is investment, G is government purchases, T is taxes, and r is the interest rate. If the economy were at full employment (that is, at its natural level of output), GDP would be $2,000$.

What is the marginal propensity to consume in this economy?

Consider an economy described by the following equations:

$$\begin{aligned} Y &=C+I+G+N X, \\ Y &=8,000, \\ G &=2,500, \\ T &=2,000, \\ C &=500+2 / 3(Y-T), \\ I &=900-50 r, \\ N X &=1,500-250 \epsilon , \\ r &=r^{*}=8. \end{aligned}$$

In this economy, solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.

Consider an economy described by the following equations:

$$\begin{aligned} &Y=C+I+G \\ &C=100+0.75(Y-T) \\ &I=500-50 r \\ &G=125 \\ &T=100 \end{aligned}$$

where Y is GDP, C is consumption, I is investment, G is government purchases, T is taxes, and r is the interest rate. If the economy were at full employment (that is, at its natural level of output), GDP would be $2,000$.

Suppose the central bank adjusts the money supply to maintain the interest rate at 4 percent, so $r=4$. Solve for GDP. How does it compare to the full-employment level?

Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were$120,000, and fixed expenses were $65,000.

Required:

1. What is the company's contribution margin (CM) ratio?

2. What is the estimated change in the company's net operating income if it can increase total sales by$1,000?

Last month when Holiday Creations, Inc., sold 50,000 units, total sales were $200,000, total variable expenses were$120,000, and fixed expenses were $65.000. 1. What is the company's contribution margin (CM) ratio? 2. Estimate the change in the company's net operating income if it were to increase its total sales by$1.000.

Given that $z$ is a standard normal random variable, compute the following probabilities.

$$P ( z \leq - 1.0 )$$

Illustrate the effects of the following developments on both the short-run and long-run Phillips curves. Give the economic reasoning underlying your answers.

a. A rise in the natural rate of unemployment

b. A decline in the price of imported oil

c. A rise in government spending

d. A decline in expected inflation