Q1 a) Briefly explain why the discount factor could credibly be interpreted as the probability of successful prosecution but not as an inflation rate.
Q: Changes in oil prices can affect the inflation-unemployment outcome, explain what effect changes in…
A: Change in oil prices can affect the inflation-unemployment outcome. Let us assume that oil prices…
Q: What can be done to minimize effects of difficult times due to high inflation, recession and/or…
A: Monetary Policy refers to the process where the central bank implements various actions such as…
Q: If the actual inflation rate is greater than the target inflation rate, then relative to the neutral…
A: Taylor Rule proposes how interest rates should be changed by the Federal Reserve to counter…
Q: According to Friedman and Phelps, the unemployment rate is above the natural rate when actual…
A: The Philips curve is an economic model developed that shows us the negative relationship between the…
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A: The assumption that prices and output(y) are flexible allows for changes in the equilibrium level as…
Q: In 1979, when the fed was deciding how aggressively to fight inflation, the typical estimate of the…
A: Sacrifice ratio refers to an economic ratio, which measures the effects of fluctuations in the rate…
Q: There are many kinds of costs of inflation to a society. Explain THREE such costs of inflation which…
A: Inflation is a systematic measure of the rate at which the price level of a basket of selected goods…
Q: “Because government policymakers do not considerinflation desirable, their policies cannot be the…
A: Answer - Need to find - Statement is "True or False " Given in the question - Because government…
Q: Which of the following economic changes are consistent with demand -pull inflation ? Check all that…
A: Demand pull inflation or excess demand inflation takes place when aggregate demand is rising while…
Q: Discuss critically about demand-pull and cost-push inflation with the help of graphically and…
A: Inflation is defined as a prolonged rise in the overall price level, resulting in a loss of money's…
Q: If you were to learn that a bottle of Gatorade increased in size from 2009 to 2010 by 100 percent,…
A: The phenomenon of the rising price level in the economy is known as inflation. Inflation is the…
Q: Please provide examples, it is crucial. If inflation raises unexpectedly by 5% indicate for each…
A:
Q: Describe the inflation rate trend in the inflation rate graph provided.
A: Inflation refers to an increase in the prices of goods and services in an economy over a period of…
Q: Which statement is CORRECT? The Consumer Price Index is considered the best measure of long-run,…
A: ) Consumer price index (CPI) is defined as the average change in the prices of fixed baskets of…
Q: Cost-push inflation may be caused by:
A: Cost push inflation is one of the major type of inflation.
Q: One argument for some inflation is you are more likely to get a pay raise it makes prices in real…
A: When talking about inflation, it represents a rise in the general price of the basket of cost and…
Q: part-b: Inflation rate hit a record 13.3% in 1979 in the US following the Iranian revolution. To…
A: The policies that are implemented by the central bank i.e. the Federal Reserve are called monetary…
Q: The positive relationship between inflation and unemployment in the Philips curve comes from that:…
A: The fact that inflation and unemployment are positively correlated presents fiscal policymakers with…
Q: The Canadian govt can reduce national dent by an interest and inflation policy which keeps the rate…
A: National debt refers to the situation the government of a country is borrowing money from the…
Q: Historically, there is a correlation between the inflation rate and real economic activity (such as…
A: Inflation refers to the increase in price of goods on a general level, throughout the economy.
Q: Describe the fiscal and monetary measures that are normally taken to curb inflation.
A: FISCAL MEASURES 1- The two main important tool of fiscal measures are revenue an dtaxes. 2- To…
Q: Among the following which statement best defines the cost push inflation? a) Price rising due to an…
A: Cost push inflation means an increase in the price level due to an increase in the cost of the…
Q: Which of the following is the most correct statement about the relationship between inflation and…
A: The Phillips Curve shows that tehre exists an inverse relationship between inflation and…
Q: What is meant by the substitution effect when measuring inflation and does the substitution effect…
A: Answer: Substitution effect: when the price of a good increases the consumers find a cheaper…
Q: Why rising commodity prices and wages might lead to cost-push inflation?
A: Inflation, in economics, is defined as an increase in the general price level of all the goods and…
Q: Identify and briefly describe some statistical index to measure the effects of inflation
A: Inflation alludes to changes over the long haul in the general degree of prices of labor and…
Q: Which of the following would impose the greatest costs to society? high levels of expected…
A: Inflation refers to the sustained increase in the general price of goods and services in an economy…
Q: For the following questions, make use of provided information. Since the peak of the pandemic…
A: If the FOMC would be increasing the interest rates by the 50 basis points, it would only attract the…
Q: Explain TWO costs of inflation from an economist’s perspective.
A: Two costs of inflation are : 1. Price system is distorted by Inflation. Inflation is the increase…
Q: Inflation targets are usually specified as a. a range for the inflation rate. b. a specific…
A: Inflation is referred to as general rise in the prices of goods and services which declines the…
Q: Q24 The natural rate of unemployment is generally assumed to be Select one: a. the rate of…
A: In an economy natural rate of unemployment refers to the optimal level of unemployment thate occurs…
Q: What is the possible factors affecting the inflation trend in Malaysia ?
A: Inflation is an economic phenomenon that is characterized by a sustained rise in prices for a…
Q: Suppose the inflation rate is zero, the income elasticity of money demand is 0.75, and the interest…
A: The money demand curve is a downward sloping curve which shows the relationship between the income…
Q: As per the additional reading “Fed’s response to Inflation Data in Oct 2021”, all the following…
A: As per the additional reading “Fed’s response to Inflation Data in Oct 2021” the consumer price…
Q: Explain the pros and cons of inflation.
A: The nations tend to operate upon the basis of the expenditures which various entities do in the…
Q: Zoro agreed to make a loan to Kenneth based on an interest rate charge of 8% per annum. Which of the…
A: INTRODUCTION: INFLATION RATE: In economics, inflation is a general growth in the costs of products…
Q: Inflation reduces the buying power of money. True False When prices are increasing at a rate of 6…
A: Inflation refers to rising the general prices of products and services, for example, an increase in…
Q: Fully explain why unanticipated inflation can decrease the level of economic activity
A: unforeseen inflation is a term used to describe inflation that occurs unexpectedly. When the price…
Q: Critically examine tools for measuring inflation
A: Inflation: A rise in the general price level of goods and services over a specified period of time…
Q: In March of 2020, the Bank of Canada dropped the policy interest rate three times. Were these action…
A: Inflation: - it is the phenomenon of an increase in the prices of goods and services in an economy.
Q: Demand-pull inflation Demand-pull inflation occurs when: A. input costs rise. B.…
A: Demand pull inflation is nothing but the inflation due to the change in demand.
Q: Explain both demand-pull and cost-push inflation
A: Inflation is the rate of increase in the general price level in the economy over a period of time.…
Q: Expectations of inflation are ____________ effective than/as actual inflation in ____________…
A: Inflation is the general increase in the overall prices in the economy.
Q: High inflation rates are considered detrimental to a country's economy. Please describe and discuss…
A: Inflation - It means rise in general price level in an economy. It is a situation of more aggregate…
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- Would you expect the kinked demand curve to be more extreme (like a right angle) or less extreme (like a normal demand curve) if each film in the cartel produces a near-identical product Like OPEC and petroleum? What if each film produces a somewhat different product? Explain your reasoning.Assume that two companies (A and B) are duopolists that produce identical products. Demand for the products is given by the following linear demand functions:P=200-QA-QBwhere QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies areTCA = 1500+55 QA +QA2TCB = 1200+20 QB +2QB2Assume that the firms form a cartel and maximize total industry profits,a. Determine the optimal output and selling price for each firm.b. Determine Frim A, Firm B, and total industry profits at the optimal solution foundin part (a).c. Show that the marginal cost of the two firms are equal at the optimal solutionfound in part (a).Consider a duopolistic market with an inverse demand curve P(Q) = 460 − 4Qand constant marginal costs for each firm that are given by MC(Q) = 10.Assume fixed costs are negligible. The two identical firms are competing in this market by choosing their production quantities simultaneously. In the equilibrium, each firm produces 37.5 units and the prevailing market price is 160. How would the joint profits of these two firms change if they successfully formed a cartel? Change in joint profits: ? (Enter your answer rounded to two decimal places; include a negative sign if appropriate.)
- The Competition Bureau in Canada wants to increase competition and reduce monopoly power. Thus it it worries about industry concentration in Canada. Let's assume that the Canadian halibut processing industry there are only two firms(duopoly). Under such a market structure, if one of the halibut processing firm increases its price, then the other firm in the halibut processing industry can: keep the price of its processed halibut constant and thus increase its market share. keep its price of its processed halibut constant and thus decrease its market share. decrease its price of its processed halibut and thus decrease its market share. try to achieve economies of scale. increase its price of its processed halibut and thus increase its market share.There are two firms in the market (duopoly). These two firms are competingsimultaneously. The first firm chooses its output level (x) by predicting the second firm’soutput (y). Let c denote the total cost function c(x) = x and c(y) = y. Also, let’s assumethat the inverse demand function is p(Y) = 7 - Y where Y = x + y. (1) Obtain the reactionfunction of the first firm. (2) Find the equilibrium (output and profit of each firm) whentwo firms simultaneously competejust answer the subpart d a. Explain what you know about collusion and cartels, including: definition, formation of motives, types and differences between these types, and so on. b. Why is this behavior often encountered in imperfectly competitive market structures such as oligopolies? c. What obstacles/obstacles do collusion and cartels often face? d. Name and explain at least 3 factors that can facilitate the occurrence of collusion and cartel!
- Please help with these 3 T/F: just the answer is needed - true or false 1. Consider a duopoly model in which two firms have the same cost functions. Comparing a Stackelber model and a Cournot model, a Stackelberg leader will necessarily make at least as much profit as he would if he acted as a Cournot duopolist. 2. In the Bertrand model, each firm decides its quantity simultaneously, and the price will be determined by the market demand with the total quantities supplied. 3. A duopoly in which two identical firms are engaged in Bertrand competition will not distort prices from their competitive levels.Two firms, 1 and 2, compete in price Market demand in period t is given by D(t) = AtD(p) with A > 0 The common discount factor is ? ? (0, 1) Suppose the firms use trigger strategies to collude at the monopoly price pm = arg max(p ? c)(A)tD(p) ? (A)t?m (note that pm does not depend on A and t due to the function form) Suppose the punishment after deviation is returning to marginal cost pricing forever If the firms collude, they set the same prices and evenly split the profits What are firms’ collusive profits in period t? If a firm undercuts below pm in period t, what are the (optimal) deviating price and deviating profit Write down the no-deviating condition in period t? Simplify the no-deviating condition and derive the critical discount factor ? Compared to when the market is shrinking (A 1) make collusion easier? Explain in words your finding in [e]Consider a quantity-setting duopoly. The two firms are Alpha, Ltd. and Beta, Inc. The demand schedulein this market is: p Qd180 150155 175130 200Each firm has a constant marginal cost of 30 per unit. Suppose each firm can choose to produce either 75units or 100 units. Firms make their quantity choices simultaneously and the market price is whatever itneeds to be to sell the total output in the market.(a) Draw up the normal form game matrix, showing the players, strategies, and payoffs. Show your workdetermining the profits in each box in the matrix.(b) Determine the Nash equilibrium of this game.(c) Suppose the firms were able to come to an agreement to make more profit. What would this agreementbe?(d) Explain how the government might respond to such an agreement and why.
- Consider a quantity-setting duopoly. The two firms are Alpha, Ltd. and Beta, Inc. The demand schedulein this market is:p Qd180 150155 175130 200Each firm has a constant marginal cost of 30 per unit. Suppose each firm can choose to produce either 75units or 100 units. Firms make their quantity choices simultaneously and the market price is whatever itneeds to be to sell the total output in the market.(a) Draw up the normal form game matrix, showing the players, strategies, and payoffs. Show your workdetermining the profits in each box in the matrix.(b) Determine the Nash equilibrium of this game.(c) Suppose the firms were able to come to an agreement to make more profit. What would this agreementbe?(d) Explain how the government might respond to such an agreement and whyTwo dairy farmers produce milk for a local town with local milk demand given by Q=100-1/3P(P denotes price measured in Rands, Q denotes the quantity measured in liters). Both farmers have the same cost function given by TC=150+2q(wheredenotes output).(a) Determine the reaction function of each farmer. (b) Find the Cournot-Nash equilibrium. (c) Calculate profits for each farmer (d) Suppose that both farmers decide to form a cartel, determine profitsfor each farmer under the cartel (e) What output should farmer 1 produce if he/she expects their rival to produce 20 units? (f) Calculate the profits if farmer 2 decides to break the cartel agreement (g) Does joining a cartel offer any benefits to both farmers? Justify your answer (h) What if farmer 1 is a leader and farmer 2 a follower, determine the price, quantity and profits made by these two farmers. Please solve d, e,f,g and hTwo dairy farmers produce milk for a local town with local milk demand given by Q=100-1/3P(P denotes price measured in Rands, Q denotes the quantity measured in liters). Both farmers have the same cost function given by TC=150+2q(wheredenotes output).(a) Determine the reaction function of each farmer. (b) Find the Cournot-Nash equilibrium. (c) Calculate profits for each farmer (d) Suppose that both farmers decide to form a cartel, determine profitsfor each farmer under the cartel (e) What output should farmer 1 produce if he/she expects their rival to produce 20 units? (f) Calculate the profits if farmer 2 decides to break the cartel agreement (g) Does joining a cartel offer any benefits to both farmers? Justify your answer (h) What if farmer 1 is a leader and farmer 2 a follower, determine the price, quantity and profits made by these two farmers. Please answer g and h
