Consider a country with two political parties, Party A and Party B. Party A cares more about unemployment than Party B, and Party B cares more about inflation than Party A. When Party A is in power, they choose an inflation rate of is, and when Party B is in power, they choose an inflation rate of g. We assume that a > g. The Phillips curve is given by n, = ne – a (u, – Un). An election is about to be held. Assume that expectations about inflation for the coming year (represented by g) are formed before the election. (Essentially, this assumption means that wages for the coming year are set before the election.) Moreover, we can assume that both parties A and B have an equal chance of winning the election. If the central bank sets an inflation target and monetary policy is not affected by who wins the election because the central bank is independent, do the preferences of Party A and Party B matter?
Category: Economics
-
(Answered) Revenue at a major smartphone manufacturer was $2.5 billion for the nine months ending March 2 , up…
Revenue at a major smartphone manufacturer was $2.5 billion for the nine months ending March 2 , up 80 percent over revenues for the same period last year. Management attributes the increase in revenues to a 142 percent increase in shipments, despite a 22 percent drop in the average blended selling price of its line of phones.Given this information, is it surprising that the company’s revenue increased when it decreased the average selling price of its phones?
No. Own price elasticity is -0.15 , which means demand is elastic and a decrease in price will raise revenues.
Yes. Own price elasticity is -6.45, which means demand is elastic and a decrease in price will decrease revenues.
Yes. Own price elasticity is -0.15 , which means demand is inelastic and a decrease in price will decrease revenues.
No. Own price elasticity is -6.45 , which means demand is elastic and a decrease in price will raise revenues. -
(Answered) When a U.S. domestic producer begins selling exports, they typically need to worry about the…
When a U.S. domestic producer begins selling exports, they typically need to worry about the foreign exchange market, since often the revenues an exporter earns are foreign currencies that then need to be traded into dollars. Because the foreign exchange value of the dollar tends to fluctuate, this adds an additional level of risk to the exporter’s business. What are some skills needed and factors that would make a domestic producer willing to take on this extra and new type of risk?
RubricCriteriaWeightWhat additional expertise would a producer need to trade successfully in the export market and the foreign exchange market? To what extent is this different from the expertise necessary to sell domestically?30 How could a producer benefit from a larger market for its products?30What additional benefits might a producer obtain from exporting?30Write up your analysis using correct language, explaining all your work -
(Answered) In a very competitive market, how many suppliers will there be? In a very competitive market, how…
➤ Will sellers lower price if they can sell unlimited quantity at a higher price?
If a seller could truly sell unlimited quantity at a higher price, there is no incentive to lower price because profit per unit would fall. In competitive markets that situation is unsustainable: entry and price-taking behavior push prices toward marginal cost, so persistent above-market sales disappear in the long run. -
(Answered) Consider the only electric company in a small town, which you can assume operates as a natural…
Consider the only electric company in a small town, which you can assume operates as a natural monopoly. The following graph shows the demand curve for electricity services per month, as well as the provider’s marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve.
Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. Complete the first row of the following table.
Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Complete the second row of the previous table.
Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Complete the third row of the previous table.
True or False: Under the average-cost pricing policy, the electric company has no incentive to cut costs. True False -
(Answered) Q1) Two firms can control emissions at the following marginal costs: MC1 =$200q1, MC2 =$100q2,…
Q1) Two firms can control emissions at the following marginal costs: MC1 =$200q1, MC2 =$100q2, where q1 and q2 are, respectively, the amount of emissions reduced by the first and second firms. Assume that with no control at all, each firm would be emitting 20 units of emissions or a total of 40 units for both firms.
Compute the cost-effective allocation of control responsibility if a total reduction of 21 units of emissions is necessary.
Compute the cost-effective allocation of control responsibility if the ambient standard is 27 ppm, and the transfer coefficients that translate a unit of emissions into a ppm concentration at the receptor are, respectively, a1 =2.0 and a2=1.0.
Q2) Assume that the control authority wanted to reach its objective in 1(a) by using an emissions charge system.
What per-unit charge should be imposed?
How much revenue would the control authority collect? -
(Answered) Suppose that the tritezene industry is initially operating in long-run equilibrium at a price level…
Suppose that the tritezene industry is initially operating in long-run equilibrium at a price level of $6 per pound of tritezene and quantity of 324 million pounds per year.
Suppose a top medical journal publishes research that animal-alternative protein sources such as tritezene could increase your expected lifespan by 4 years. The publication is expected to cause consumers to demand tritezene at every price. In the short run, firms will respond by Shift the demand curve, the supply curve, or both on the following graph to illustrate these short-run effects of the publication. Shift the demand curve, the supply curve, or both on the following graph to illustrate both the short-run effects of the publication and the new longrun equilibrium after firms and consumers finish adjusting to the news. The new equilibrium price and quantity suggest that the shape of the long-run supply curve in this industry is run. -
(Answered) Question 91.5 pts1How does the demand of Western consumers for products made under RS (responsible…
Question 91.5 pts1How does the demand of Western consumers for products made under RS (responsible sourcing) policies impact the ultimate effect of RS policies on Costa Rica?
No impact because we don’t buy products that get sold in Costa Rica
If western consumers are willing to pay more for RS-produced goods, the effects of RS policies in Costa Rica become more positive because it mitigates the impact of cost increases borne by local firms in Costa Rica of implementing RS policies
If western consumers are willing to pay more for RS-produced goods, the effects of RS policies in Costa Rica become more positive because it magnifies the impact of cost increases borne by local firms in Costa Rica of implementing RS policies
If western consumers are willing to pay more for RS-produced goods, the effects of RS policies in Costa Rica become more negative because we’re promoting the exploitation of Costa Rican workers -
(Answered) Cossider the eschange rate between South Kosea and Mexico. Typicallf, exchange rates vary over…
Consider the exchange rate between South Korea and Mexico
Typically, exchange rates vary over time, sometimes quite dramatically. The scenarios present various changes that may affect the exchange rate. Indicate whether each scenario will tend to cause an appreciation or depreciation of, or have no effect on, the value of the South Korean won relative to Mexican pesos.
A magazine publishes an article indicating that analysts expect the value of Mexican pesos to rise relative to South Korean won.
The central bank in South Korea announces that it will raise interest rates on government bonds.
Based on a World Bank report, the inflation rate in South Korea will be IS next year, whereas the inflation rate in Mexico will be lower.
The price of a specific basket of goods in South Korea is roughly 1.2 times higher than the price of an identical basket of goods in Mexico. Use this to justify the estimated PPP exchange rate. -
(Answered) BMCBloomberg Market Concepts© 2024 Bloomberg L.P.OUTLINE TRANSCRIPTChoose Your LanguageCurrency…
➤ How does the US dollar influence exchange rates and global trade?
The dollar affects exchange rates through interest-rate differentials, capital flows, and its role as an invoicing currency. Federal Reserve decisions change dollar liquidity and borrowing costs, which influence emerging-market debt, import prices, and trade competitiveness. Dollar-denominated contracts and commodity pricing create strong channels between US monetary conditions and global trade.