The US witnessed 2 major shocks: 1- decrease (Curtailment) of foreign lending 1928-29 which had a deflation impact on the world economy: capital imports of European countries declined. They used to use it to offset BOP. When this became limited‚ the only way to balance BOP was to draw upon their limited reserves of Gold. So we have deflation. Also‚ no capital inflow means that debtor countries have a tailing off in domestic economic activity. 2- the peaking of
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bushels 45 bushels 1. Portugal can produce more of both goods per acre than can England. So Portugal has the absolute advantage in both goods: for a given amount of inputs‚ Portugal can achieve higher output in wine (or corn) than can England. 2. Comparative advantage is determined by the “price” of one good in terms of the other good within each country. 3. Law of comparative advantage: A country in its trade with another country will export the good at which it has a comparative advantage
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paper Economics 301 Managerial Economics Homework 1 1) Beginning in year 0‚ with a payment of $50‚000‚ what is the present value of an asset in perpetuity which grows by 4% each year and which is discounted at the rate of 6% each year? 2) Should we proceed with a project that will pay us $100 million per year for the next five years in return for an investment of $400 million today? Why‚ or why not? Assume the interest rate of 5% per year. 3) Chapter 1 problem 9 4) Let the Market
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steel aided in Europeans’ attempts to conquer the native population of Africa and the Americas. How did germs work in favor of European conquest against the Incas? How did germs work against the Europeans in their imperialist efforts in Africa? 2. Describe the attempt of Europeans to colonize Africa depicted in Guns‚ Germs‚ and Steel. Specifically‚ how successful were they in South Africa? What happened when they encountered the Khoisan tribes? How about the Zulu? Were they able to successfully
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long-run consequences of the policies of the remote or recent past. b. Advocate public or collective ownership and administration of the means of production and distribution of goods. c. Argue for more governmental stimulus to help the economy. 2. Would Henry Hazlitt more likely say: a. That government should fund public works to maintain full employment. b. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing
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___________________________________________________________________________ 1. Which of the following is a distinguishing feature of a command system? A. private ownership of all capital. B. central planning. C. heavy reliance on markets. D. wide-spread dispersion of economic power. 2. Which of the following is a distinguishing feature of a market system? A. public ownership of all capital. B. central planning. C. wide-spread private ownership of capital. D. a circular flow of goods‚ resources‚ and money. 3. Examples of command
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BRANDEIS UNIVERSITY Department of Economics Economics 10a Mr. Coiner Introduction to Microeconomics Fall‚ 2012 Problem Set 2 1. This question examines the impact of 5 events on the market for large automobiles with relatively low gas mileage and relatively high emission levels (think Hummer). Answer each part separately. For each event‚ indicate which curve (D or S) shifts‚ indicate in which direction (left or right) it shifts‚ and show in a demand-supply diagram in which
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to distinguish our needs by different prices. Also‚ a cow costs $20‚ it is expensive than a chicken that costs $10. As long as money keep its value stable‚ people saving money into purchasing power in the future‚ because money can store of values. 2. State and explain Friedman’s Theory of Inflation. State and explain Fisherian Theory of Interest Rate. Friedman’s theory of inflation is that there is a lot of money chasing too few goods. For example‚ diamonds are dropping their prices to every
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Food and beverages at 15%. These three combined make up 65% of the market basket‚ so majority of the basket includes these three categories. 2. Suppose the market basket of goods and services purchased by an average urban household consists of only X‚ Y‚ Z‚ three consumer products. Calculate the CPIs for each year and the inflation rate for the Year 1-Year 2 period. There are 5 steps to calculate the CPI. The first is to fix the basket. Then‚ you find the prices of the items in your basket. Third
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Classical and Keynesian Economic Theories Economics can be defined as a social science concerned primarily with description and analysis of the production‚ distribution‚ and consumption of goods and services. There are two main schools of thought when it comes to economics: Classical and Keynesian economics. Each theory takes a different approach to the economic study‚ but neither approach is flawless. First‚ looking at the Classical economics theory‚ it is based largely on the thought that free
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