5. Using money creation to pay for government spending Consider Tralfamadore, a hypothetical country that produces only burgers. In 2018, a burger is priced at $4.00. Complete the first row of the table with the quantity of burgers that can be bought with $300. Hint: In this problem, assume it is not possible to buy a fraction of a burger, and always round down to the nearest whole burger. For example, if your calculations result in 1.5 burgers, the answer should be 1 burger. Year 2018 2019 Price of a Burger (Dollars) 4.00 Burgers Bought with $300 (Quantity) 175 Suppose the government of Tralfamadore cannot raise sufficient tax revenue to pay its debts. In order to meet its debt obligations, the government prints money. As a result, the money supply rises by 20% by 2019. Assuming monetary neutrality holds, complete the second row of the table with the new price of a burger and the new quantity of burgers that can be bought with $300 in 2019. The impact of the government's decision to raise revenue by printing money on the value of money is known as the

5. Using money creation to pay for government spending Consider Tralfamadore, a hypothetical country that produces only burgers. In 2018, a burger is priced at $4.00. Complete the first row of the table with the quantity of burgers that can be bought with $300. Hint: In this problem, assume it is not possible to buy a fraction of a burger, and always round down to the nearest whole burger. For example, if your calculations result in 1.5 burgers, the answer should be 1 burger. Year 2018 2019 Price of a Burger (Dollars) 4.00 Burgers Bought with $300 (Quantity) 175 Suppose the government of Tralfamadore cannot raise sufficient tax revenue to pay its debts. In order to meet its debt obligations, the government prints money. As a result, the money supply rises by 20% by 2019. Assuming monetary neutrality holds, complete the second row of the table with the new price of a burger and the new quantity of burgers that can be bought with $300 in 2019. The impact of the government's decision to raise revenue by printing money on the value of money is known as the

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter4: Utility Maximization And Choice

Section: Chapter Questions

Problem 4.2P

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For this problem, assume that Joe has $80 to spend on books and movies each month and that both goods must be purchased whole (no fractional units). Movies cost $8 each, and books cost $20 each. Joe’s preferences for movies and books are summarized by the following information: MOVIES BOOKS NO. PER MONTH TU MU MU/S NO. PER MONTH TU MU MU/S 1 50 — — 1 22 — — 2 80 — — 2 42 — — 3 100 — — 3 52 — — 4 110 — — 4 57 — — 5 116 — — 5 60 — — 6 121 — — 6 62 — — 7 123 — — 7 63 — — a. Fill in the figures for marginal utility and marginal utility per dollar for both movies and books. b. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. c. Given the budget of $80, what quantity of books and what quantity of movies will maximize Joe’s level of satisfaction? Explain briefly. d. Draw the budget…
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Assume that John has RO 21 to spend on Energy drink and Protein bars each month and that both goods must be purchased whole (no fractional units). Energy drink (X) cost RO 3 and Protein bars (Y) cost RO 2 each. John’s preferences for movies and books are summarized by the following information: No. per Month Energy drink No. per Month Protein bars TU MU MU/Px TU MU MU/Py 1 84 1 36 2 156 2 66 3 216 3 90 4 264 4 108 5 300 5 120 6 324 6 126 7 336 7 126 Fill in the figures for marginal utility of X and marginal utility of Y per dollar for both movies and books. Are these preferences consistent with the law of diminishing marginal utility? Explain briefly. Given the budget of RO 21, what quantity of Energy drink (X) and what quantity of Protein bars (Y) will maximize John’s…
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Please no written by hand and no image Assume that a consumer purchases a combination of products Y and Z and that the MUy ÷ Py = 30 ÷ 2 and MUz ÷ Pz = 45 ÷ 3. To maximize utility, without spending more money, the consumer should Answer choices: purchase less of Y and more of Z. purchase more of Y and less of Z. purchase more of both Y and Z. make no change in the quantities Y and Z.
Elizabeth M. Suburbs makes $200 a week at her summer job and spends her entire weekly income on new running shoes and designer jeans, because these are the only two items that provide utility to her. Furthermore, Elizabeth insists that for every pair of jeans she buys, she must also buy a pair of shoes (without the shoes, the new jeans are worthless). Therefore, she buys the same number of pairs of shoes and jeans in any given week. a. If jeans cost $20 and shoes cost $20, how many will Elizabeth buy of each? b. Suppose that the price of jeans raises to $30 a pair. How many shoes and jeans will she buy? c. Show your results by graphing the budget constraints from part a and part b. Also, draw Elizabeth’s indifference curves. d. To what effect (income or substitution) do you attribute the change in utility levels between part a and part b? e. Now we look at Elizabeth’s demand curve for jeans. First, calculate how many pairs of jeans she will choose to buy if jeans prices are $30, $20,…
2. If war breaks out in the Middle East and sugar is rationed so that Rosie is limited to purchasing only 8 units of sugar, what bundles will she consume with an income of $ 20? Did the restriction alter her consumption? Explain. What bundles will she consume with an income of $ 40? Did the restriction alter her consumption? Explain. I need help on this question