7) Refer to Figure 2-2. If the U.S. economy is currently at point N, which of the following could cause it to move to point K? A) government expenditures increase. C) the firm's cash flow rises as profits rise. B) corporate taxes increase. D) household wealth rises.

The tax cuts of 2008 and 2009 reduced the disposable income of U.S. consumers.  True or  False

(b) Assume that household income increases as a result of recent economic prosperity in Country X. On your graph in part (a), show the effect of the increase in household income on real output and the price level.

Please provide answer in 1 hr

Exercise 4. You are a manager at a certain factory that designs small gadgets. The factory has been quite successful in the past years. Your CEO is wondering whether or not it is a good idea to expand the factory this year. The cost to expand the factory is $1.5M. Doing nothing will result in expected $3M in revenue if the economy stays good and people continue to buy plenty of gadgets, but only $1M in revenue is expected if the economy is bad. On the other hand, expanding the factory carries an expected $6M in revenue if economy is good and $2M if the economy is bad. Assume there is a 40% chance of a good economy and a 60% chance of a bad economy. Also, assume the costs of operating the factory account to $.5M if the factory is expanded and $.3M if not. a. Illustrate a Decision Tree showing these choices. b. What should you do?

QUESTION 5 (a) What are some criticisms against the Keynesian model? How do post Keynesian models try to address? (b) Graphically illustrate and explain the conditions for a competitive general equilibrium (c) Graphically illustrate and explain the effect of an increase in government spending on general equilibrium conditions.

The figure below shows the average share of total household expenses for a good and the inflation-adjusted price of the same good. The share of all expenses line is calculated as expenditures on this good (that is the price of this good multiplied by the quantity of this good purchased) divided by total household expenses. This line shows how expenditures on this good changes over time, holding total spending constant. The other line is the price of this good adjusted for inflation (i.e., the increase in the price level for all goods). The specific units are obscured on purpose.  Use these data to characterize the price elasticity of demand. Explain using the definitions of price elasticity of demand and total expenditure. Notice that I am not asking you to calculate the price elasticity of demand. Use the data to talk about the size of price elasticity of demand in general terms. Is demand elastic or inelastic? Is the price elasticity of demand very large? Very small? Close to 1?…

Suppose we start with a general equilibrium, and the economy experience an improvement in payment technology. Which of the following statements correctly describes the goods market response in the short term?  1. The IS curve remains unchanged 2. The IS curve shifts to the left  3. The IS curve shifts to the right 4. None of the above

Which of the following questions would be studied in the area of microeconomics? Select one: a. What determines the number of hours an individual works? b. Do interest rates affect net exports? c. Will an increase in government spending cause inflation? d. What portion of total spending comes from households in the economy?

Which of the following statements is true? An individual's future spending decreases when she lends money. An individual's future spending increases when she borrows money. An economic agent borrows to move her spending from the future to the present. An economic agent borrows to move her spending from the present to the future.   Loss aversion refers to the idea that people ________. generally tend to avoid risky activities are more prone to making losses than gains in day-to-day transactions psychologically weight a loss more heavily than they psychologically weight a gain are unwilling to undertake expenditures that reduce the probability of future losses   Which of the following is an example of adverse selection? Overgrazing of a common piece of land A passenger traveling in a subway without a ticket A customer buying a defective appliance from a used goods market The generation of hazardous waste by the production of a good   More people started building houses in the…