Questions by garmstrong - Page 20
Consider a country operating under fixed exchange rates, with aggregate demand and aggregate supply given by equations (21.1) and (21.2):Y= C (Y- T) + I (Y, i e) + G + NX [Y,Y*, EP/p*]Assume that the economy is initially in medium-run equilibrium, with a constant price level and output equal to the natural level of output. Foreign output, the foreign price level and the foreign interest rate are fixed throughout the problem. Assume that expected (domestic) inflation remains constant throughout the problem.a. Draw an ASAD diagram for this economy.b. Now suppose that there is an increase in government spending. Show the effects on the ASAD diagram in the short run and the medium run. How do output and the price level change in the medium run? c. What happens to consumption in the medium run? d. What happens to the real exchange rate in the medium run? (Hint: Consider the effect on the price level you identified in part [b].) What happens to net exports in the medium run?e. Given that the exchange rate is fixed, what is the domestic nominal interest rate? Does the increase in government spending affect the domestic nominal interest rate? What happens to the real interest rate in the medium run? (Hint: Remember that expected inflation remains constant by assumption.) What happens to investment in the medium run?f. In a closed economy, how does an increase in government spending affect investment in the medium run? (Refer to Chapter 7 if you need a refresher.)g. Comment on the following statement. In a closed economy, government spending crowds out investment. In an open economy with fixed exchange rates, government spending crowds out net exports.
Question 1, Please read my following article and advise whether it is an example of cournot or bertrand oligopoly and whether the prices are going to remain high or decrease in the future. Container shipping has increased dramatically since the pandemic. The mean cost of shipping a big container (a 40-foot-equivalent unit) has risen past $20,000 some eight times higher than a year ago. In response, some organizations are taking desoerate actions, Techno gym, a maker of pricey gym machines, is switching to cheaper subsitutes. But costs are also sky- high as capacity, half of it usually provided by the same company. Forms of transport (planes,trucks) can only ship a certain amount, especially when it comes to shifting goods around the world. Container ships deliver around a quarter of the worlds traded goods by volume and three-fifths by value. Recently, container shipping has kept supply chains and globalisation in business. Shipping was very cheap. But after disruption the metal boxes are losing their reputation for low prices and reliability.