Applied Intermediate Macroeconomics 1st Edition Kevin D Hoover - Solutions

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Why do feminist economists, stratifcation economists and LGBTQ+economists focus on culture as a key determinant of inequality? Explain and give examples.
Brazil’s Gini coefcient fell from 63.3 in 1989 to 51.5 in 2014. What does this tell us about inequality in Brazil? Explain carefully.
Figure 22.20 depicts hypothetical information for a frm.a. Is this frm a monopsony? Why or why not?b. Is this frm a monopoly? Why or why not?c. Complete the table.d. Determine the optimal quantity of laborers for this frm to hire.e. Use a spreadsheet program to plot out a graph of the demand curve
What are the main arguments of opponents of the minimum wage? What are the main arguments of supporters of the minimum wage? Which arguments do you fnd most convincing?
Using Figure 22.9 as your starting point, with a minimum wage of W2 in place, analyze how each of the following events will afect the demand and supply curves for unskilled labor, the number of laborers hired by frms, and the amount of surplus labor that exists:a. The economy booms and the demand
Use the political economy model of the working day to determine how each of the following events would impact wages and the rate of proft:a. The government increases the minimum wage.b. The government reduces the maximum number of work hours allowed per week from 40 to 35.c. New robots are invented
Compare and contrast the stick approach to worker motivation with the carrot approach. How can either approach be proftable for frms operating in the same industry (e.g. Wegman’s vs. Walmart)?
List the major sources of confict between workers and owners. Which of these sources of confict do you think is most pervasive in white-collar work such as investment banking? Which sources of confict might be most pervasive in blue-collar work in an Amazon warehouse?
How does the U.S. education system compare with those of other developed countries? Explain briefy.
Write a short essay in which you contrast the analysis of public goods by (a) mainstream economists, (b) progressive political economist John Kenneth Galbraith, and (c) Austrian economist Murray Rothbard. Which approach do you fnd most convincing? Why?
Explain why privatization was efective in providing train service in Britain, but not efective in providing the infrastructure for train service(the train tracks).
Using the graph in Figure 21.9, answer the following questions:a. Which point represents the socially efcient equilibrium?b. Which point represents the private market equilibrium?c. What distance on the graph would represent the lost social benefts from producing at the private market
Would vaccinations be considered a public good or a quasi-public good?Explain briefy.
How are quasi-public goods diferent from public goods? Explain.
List the seven categories of public goods. Which category do you think is most important for economic growth? Which category is most important for quality of life of a country’s citizens? Explain briefy, and support your answer.
Answer the following questions related to Figure 20.5.a. What price and quantity combination would an unregulated market generate? Why would economists consider this outcome inefcient?Explain carefully and make specifc references to the graph in your answer.b. What is the socially efcient amount of
How does a carbon tax difer from a cap-and-trade system? Why do many mainstream economists prefer a cap-and-trade system? What are some of the problems that can occur with a cap-and-trade system?
Compare and contrast ecological economics and environmental economics. Which approach do you fnd most compelling in addressing the issue of climate change? Explain, and support your answer.
Analyze the issue of market failure and government failure and evaluate whether or not the United States strikes the right balance of government and markets. Should the U.S. government intervene more strongly in markets? Or do you think markets are efcient enough and government intervention
Why do unregulated markets work poorly when it comes to common resources or goods that are non-excludable? Explain and give specifc examples.
Which market failures are created by a lack of property rights? Explain how cap-and-trade and “individual transferable quotas” solve the property rights problem in specifc types of markets.
Using a graph, explain why markets lead to inefcient outcomes when a negative externality is present. Also using the graph, explain how the government can internalize a negative externality.
Explain the role of unions in correcting the market failure of unequal bargaining power in the labor market. Do you think the U.S. government should encourage or discourage the formation of unions? Explain your answer briefy.
Which of the eight market failures is the U.S. government least efective in correcting? Why do you think the U.S. government is particularly ineffective in this area?
In his book Small Is Beautiful (1975), economist E.F. Schumacher argues that the problem with corporations is their bigness. When corporations become huge and impersonal, they tend to act to maximize profts without concern for people, communities, and the environment. From this perspective, only by
Economist Milton Friedman argues that the only responsibility of corporations is to make profts. Do you agree with his argument? Why or why not?
Write an essay in which you critically analyze the arguments for and against large corporations. Given these arguments, how should the government approach regulating them? Do you think the corporate structure is fundamentally fawed, as argued by many political economists? Or, do you think the
The payof matrix in Figure 17.10 shows the payofs for two supermarkets, Giant and Weis, who are considering two diferent strategies: Low advertising expenditures or high advertising expenditures.a. What is Giant’s best strategy?b. What is Weis’s best strategy?c. Does either frm have a dominant
The payof matrix in Figure 17.9 shows the payofs for two supermarkets, Giant and Weis, who are considering two diferent strategies: Low advertising expenditures or high advertising expenditures.a. Using the payof matrix below, what is Giant’s dominant strategy (if any)? What is Weis’s dominant
How does competition in oligopolies difer from competition in other market structures? Explain carefully.
Compare and contrast the mainstream model of proft maximization in monopolistic competition with the political economy analysis of strategic behavior in monopolistic competition. What additional insights can be gleaned from the political economy approach?
Suppose that Pronto Restaurant and Deli, operating in the monopolistically competitive restaurant market, currently sells meals for an average price of $12 per meal while producing a quantity of 200 meals per day and incurring average total costs of $15 per meal.a. Draw a graph depicting Pronto’s
In 2022, the top grossing mobile gaming apps were Honor of Kings($1.7 billion), Genshin Impact ($1.3 billion), PUBG Mobile ($1.1 billion), Candy Crush Saga ($1.0 billion), Roblox ($0.8 billion), and Coin Master ($0.8 billion). There were almost one million gaming apps available at that time, and
What are the major ways in which frms in a monopolistically competitive industry diferentiate their products from the products of their competitors? Explain and give examples from an industry other than those that are described in this chapter.
The table in Figure 15.12 shows cost and revenue data for Citizens’Electric Co., a monopoly that sells power in the Lewisburg, Pennsylvania area. Q is in millions of kilowatt hours per day.a. Complete the table.b. Based on the table, is Citizens’ Electric a natural monopoly? Why or why not?Use
Explain the relationship between the demand curve and the marginal revenue curve. Why does a monopolistic frm use marginal revenue instead of price when determining the proft-maximizing level of output?
Contrast the political economy analysis of competitive markets with the mainstream economics analysis of competitive markets. Which perspective do you think best captures the dynamics of a competitive market such as agriculture?
Groundworks Farm operates in the perfectly competitive market for kale.a. In 2010, Groundworks Farm sold 20,000 bunches of kale for a price of $2 per bunch, while incurring average total costs of $3 per bunch and average variable costs of $1 per bunch. Show this situation as a graph that includes
Complete the table in Figure 14.11 and answer the following questions:a. What amount is total fxed cost in this example?b. What is the proft-maximizing level of output in the short run?c. What is the amount of economic proft or loss the frm will earn at the proft-maximizing level of output?
Compare and contrast the political economy theory of the frm with the mainstream economics theory of the frm. Where are they similar? What are the major diferences?
Complete the table in Figure 13.15 below and then answer the questions afterward.a. Does the table display the laws of specialization and diminishing returns? Why or why not?b. Using the table, explain the relationship between MC and AVC, MC and ATC, and AVC and ATC.c. Using the mainstream model of
Use the data provided in this chapter to compute a Herfndahl index for the four largest soft drinks companies and the four largest car companies.What does this information tell us about these two industries? Explain briefy.
Explain why a frm earning a 5% proft might end up going out of business using the concept of a normal proft.
If frms in an industry with easy entry and exit are earning an economic proft, what can we expect to happen in the long run to the number of frms in the industry? If frms in an industry with barriers to entry are earning an economic proft, what can we expect to happen in the long run to the number
The table in Figure 11.8 shows information on labor and output for one week for a frm that manufactures the Slinky toy. The wage rate is $800 per week.a. Complete the table below.b. Does this table display the law of specialization and the law of diminishing returns? Explain briefy.c. If the
The city council of San Francisco wants to lower the price of housing to increase their tax base and revitalize the city economy. The supply of apartments is very inelastic, and the demand for apartments is very elastic. The average price (monthly rent) of a typical apartment is $1600 per person,
Suppose that the government imposed a $3 per pack excise tax on cigarettes. Using a graph, show how the cigarette market is afected by the$3 per pack excise tax. Discuss how the cigarette excise tax will afect consumers and producers and how much revenue it will generate for the government. Also
The equilibrium price of eggs is $2 per unit (a dozen eggs is one unit), and the equilibrium quantity of eggs is 300 million units per day. The demand and supply of eggs are both inelastic (very, very steep). In order to help egg producers, the government is considering a $4 price foor or a $2 per
Using a graph of the U.S. market for Uber rides as your starting point, show how the supply and demand curves for Uber rides will be afected by specifc events, and show what happens to equilibrium price and quantity. (Note: Make sure to identify whether or not the demand and supply curves shift, or
Draw a graph of the U.S. market for wheat. Show how the supply and demand curves for wheat on your graph will be afected by specifc events, and show what happens to equilibrium price and quantity. (Note:Make sure to identify whether or not the demand and supply curves shift, or whether you are
Which of the assumptions of the supply and demand model are most likely to cause the model to lead to inaccurate results. Explain carefully.Give specifc examples to support your argument.
What role does culture seem to play in structuring economic systems?Explain using specifc examples.
What are the strengths and weaknesses of a market capitalist approach(U.S.), a guided market approach (Nordic model), and a central planning approach (U.S.S.R.) to economic development?
How do socialism and communism difer from capitalism?
Compare and contrast Keynes’s ideas with those of Hayek.
How do Keynes’s ideas relate to those of Smith and Marx?
Describe how Veblen’s evolutionary approach to economics difers from the approaches of Smith, Marx, and neoclassical economics.
How was the era of monopoly capitalism diferent from the competitive capitalism of Adam Smith’s era? Does Smith’s argument that unregulated capitalism will tend to beneft the workers hold up under monopoly capitalism?
Do you or most people you know fnd work to be alienating? Explain and give specifc examples.
Construct an argument for which two factors were most important in eroding feudalism and paving the way for mercantilism. Use specifc examples to support your argument.
How did the role and status of women change as economic systems evolved from traditional economies to feudalism?
Describe the role played by (a) tradition, (b) authority, and (c) markets in traditional, slave-based, feudal, and mercantilist economic systems.
The graph in Figure 2.9 displays a production possibilities curve for the United States in choosing between allocating resources to transportation or beer.a. What is the opportunity cost of 1 unit of beer between point A and point B?b. What is the opportunity cost of moving from point A to point
The graph below in Figure 2.8 displays a production possibilities curve for the world in choosing between allocating resources to food or machinery.a. What is the opportunity cost of moving from point B to point D?b. What is the opportunity cost of 1 unit of machinery between point D and point C?c.
The theory of financial markets suggests that it is the level of the debt (relative to the size of the economy), rather than the deficit that ought to be related to real interest rates. Using whatever data and statistical techniques you believe to be appropriate, investigate this question. Write a
With the return of U.S. Federal budget deficits in 2001 after a brief period of surpluses, political discussion turned again to the growth of the Federal debt. To put it in perspective:(a) Of course, nominal quantities are usually misleading, so convert the Federal debt to real terms (explain your
High deficits are sometimes blamed for high inflation rates.(a) Explain why.(b) Plot the U.S. Federal government budget deficit scaled by potential output and the ex post CPI inflation rate (i.e., the inflation rate calculated as pˆt =pt+1 pt− 1). Do the data appear to be stationary? Does your
High deficits are sometimes blamed for high real interest rates.(a) Explain why.(b) Plot the U.S. Federal government budget deficit (scaled by potential output) and the ex post real interest rate (10-year government bond rate less the inflation rate calculated as ˆpt =pt+1 pt− 1). Do the data
In 2010, the Social Security payroll tax in the United States was 6.20 percent on income up to $106,800 and zero thereafter; the Medicare payroll tax was 1.45 percent on income with no limit. Make two (quantitatively accurate graphs): one of the payroll tax function (i.e., the combined taxes as a
How might a strict balanced-budget amendment to the U.S. Constitution affect the actions of the automatic stabilizers in the economy?
Are state and local fiscal actions stabilizing or destabilizing? To investigate, plot quarterly state and local expenditures and revenue as shares of potential GDP, indicating the NBER recession dates with shading. Write a brief note summarizing the evidence about the stabilizing or destabilizing
For the post-World War II period, plot U.S. Federal government expenditure, total state and local expenditure, and each of the categories of state and local expenditure (on goods and services, on transfer payments, and on interest) as shares of GDP. Write a brief essay commenting on any changes in
For the post-World War II period, plot U.S. Federal government revenues and state and local revenues as a share of GDP. Compare to Figure 13.5. How have the level and composition of taxes in the U.S. economy changed during this period?
For the U.S. Federal government, plot total revenues and revenues due to each of the main tax sources (personal taxes (e.g., income taxes), corporate taxes, customs and excise taxes, and contributions to social insurance)as a share of GDP for the post-World War II period. Describe the pattern of
For the U.S. Federal government, plot current and capital (i.e., investment) expenditures as a share of GDP for the post-World War II period.On a separate graph, plot military and nonmilitary expenditures as a share of GDP. Relate any large changes in the series on either graph to particular
For the U.S. Federal government, plot total expenditures and expenditures on goods and services, transfer payments, and interest payments, all as a percentage of GDP for the post-World War II period. How have these shares changed over time? Write a brief essay discussing these changes in
An unexpected rise in productivity would count as an aggregatesupply shock: positive or negative? Use a diagram or other analysis to show how such a shock would affect output (relative to potential) and inflation. How should fiscal policy respond? What happens if policymakers fail to perceive the
Figure 17.2 analyzes a negative aggregate-demand shock. Identify a positive-demand shock and use a similar diagram to analyze its effects, noting its effect on output, employment, unemployment, and inflation. Describe particular fiscal-policy actions that would maintain (or restore) NAIRU in the
Figure 17.1 uses the IS curve with a market real rate of interest to show the effect of a fiscal-policy action: an increase in government expenditure.Use the same apparatus to show the effect of other fiscal-policy actions:(a) an increase in marginal tax rates;(b) an unanticipated across-the-board
The distinction between aggregate-supply factors and aggregatedemand factors was already made in Chapter 15. Aggregate-supply and aggregate-demand shocks suggest a special case in which the factor changes by a large and unexpected amount. Give some particular examples of recent events that might be
At the time of writing this book (late 2010), the Euro Area was in turmoil as the result of a series of crises concerning excessive government debt in Greece and Ireland (and possibly in Portugal and Spain as well).Many feared that one or more countries might abandon the use of the euro and
Describe how a loose monetary policy might be transmitted through the exchange-rate channel to the real economy.
Use the internet to find the current CBO output gap and the current CPI inflation. Use them to calculate a target for the Federal-funds rate according to the Taylor rule (equation (16.2′)). Find today’s actual Federalfunds rate. How do they compare? Find the last time the Federal Reserve
How important are the inflation-target and output-gap terms in the Taylor rule? Calculate and plot three series 1984–present using quarterly data: (1) Use equation (16.2′) to calculate a target series for the Federal-funds rate; (2) repeat (1) but set the coefficient on the deviation from the
Does the Federal Reserve follow a policy of “leaning against the wind” in its management of the Federal-funds rate?(a) Make a diagram, similar to Figure 5.8 (in Chapter 5) for the Federal-funds rate: For each business cycle for which enough data are available, express the values for the 12
The development of financial markets from the mid-1970s through the recession of 2007–2009 improved the access of firms and households to credit. For example, mortgage applications were simplified and made accessible through the internet; and mortgage lenders competed heavily for business among
Use a diagram like Figure 16.10 to explain the effects of an increase in reserves operating through the credit channel. Indicate clearly which effects can be attributed to the narrow credit channel and which to the broad credit channel.
Use a diagram like Figure 16.8 to explain the effects of a monetary policy action that results in an increase in long-term interest rate (rN) – that is, the nominal interest rate that, at the current rate of inflation, raises the real interest rate (rrN) above the value compatible with NAIRU.
The difference between the Moody’s Aaa bond rate and the 10-year Treasury bond rate is a measure of the risk premium of corporate over government debt. Calculate and plot this time series and indicate the NBER recession dates with shading. What are the cyclical characteristics of this series?Do
Repeat Problem 16.9 using the annual change (current month over 12 months previous) in each interest rate. How do the results differ? Can you explain the difference in terms of typical Federal Reserve behavior (e.g., Figure 16,12 is relevant) and in terms of the importance of credibility in
How effective are the linkages connecting monetary policy to the economy? Create the following scatterplots; add regression lines and R 2:(i) the change in the 3-month Treasury bill rate (vertical axis) on the change in the Federal-funds rate (horizontal axis);(ii) the change in the 10-year
Find the last time the Federal Reserve changed its target for the Federal-funds rate (see Problem 16.1). Use a daily-yield curve from the Wall St. Journal or another source or construct it yourself from data available on the Board of Governors of the Federal Reserve’s website (release H.15), and
Use diagrams similar to Figure 16.6 and 16.7 and ignore the effects of risk to show the effects on the time-path of the Federal-funds rate itself and the yield curve of:(a) a 1-point cut in the Federal-funds rate that is credibly believed to be permanent;(b) a 1-point cut in the Federal-funds rate
Use a diagram like Figure 16.4 and assume that open-mouth operations are effective to show the effect on the Federal-funds rate and the government-bond rate of an increase in the Federal-funds-rate target. If openmouth operations were not effective, what actions would the Fed have to take to secure
Use a diagram like Figure 16.3 to show the effects of an openmarket sale of government bonds on the reserves, the stock of government bonds, the Federal-funds rate, and the yield on government bonds.
Indicate on a pair of balance sheets similar to Table 16.1 the effects on the portfolios of the Federal Reserve and the commercial banks of the following actions. (Recall that balance sheets must always balance; make the minimum changes consistent with the question; if the question does not give
The monetary aggregates are defined in Chapter 6 (Table 6.3). On the same website as in the previous problem, find the most recent statistical release H.6 “Money Stock Measures.” For the most recent month available:What fractions of M1 are currency and demand deposits? What fractions of M2 are
On the same website as in the previous problem, find the most recent statistical release H.3 “Aggregate Reserves of Depository Institutions and the Monetary Base.” For the most recent month available: What fraction of the monetary base is held as currency and reserves? What fraction of reserves
Go the website of Board of Governors of the Federal Reserve.(a) What is the most recent daily Federal-funds rate?(b) Find the most recent FOMC policy statement in which a change in the target for the Federal-funds rate is announced. How big was the change?What is the current target?(c) Read the
Repeat Problem 15.18 using scaled output rather than unemployment in the Phillips curve (equation (15.13). Comparing your results with those in Problem 15.19, which version of the Phillips curve does a better job at prediction?

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Applied Intermediate Macroeconomics 1st Edition Kevin D Hoover - Solutions

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