2. Monetary policy and fiscal policy often change at the same time.
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2. Monetary policy and fiscal policy often change at the same time. Suppose the government wants to raise investment but keep output constant. In the IS-LM model, what mix of monetary and fiscal policy will achieve this goal? (Consider a closed economy (no external sector)).
3. Explain why, for Hyman Minsky, a capitalist economy is inherently unstable. In particular, explain the three financial positions discussed by Minsky and what a ‘Minsky Moment’ is.
5. Explain the three steps to analyze a firm’s production. What is the difference between the short run and the long run when a firm is choosing the combination of inputs? Then, explain the following concepts: i. firm; ii. Production technology; iii. Production function; iv. Isoquant; v. Isocost.
7. a. What are ‘returns to scale’? Explain why we may have increasing, constant, or decreasing returns to scale.
b. How do we analyze the relationship between the scale of a firm’s operation and its costs? Explain what economies of scale and of scope are.
8. Explain the differences between the following market structures: perfect competition, monopoly, oligopoly, and monopsony.
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