Suppose the economy is operating at the Zero Lower Bound for the nominal policy rate, the economy is operating at the potential output in period 't,' but there is a large government budget deficit. A newly elected government vows to cut spending and reduce the deficit in period 't+1,' period 't+2,' and subsequent periods. Use an IS-LM-PC diagram and words to answer the following questions. A) What is the effect of the policy on output in period t+1?
B) What is the effect of the policy on the change in inflation in period t+1?
C) If expected inflation depends on past inflation, when what happens to the real policy rate in period t+2? How will this affect output in period t+3?
D) How does the ZLB on nominal interest rates make fiscal consolidation more difficult?

Suppose the marginal damage and marginal benefit curves in a polluted neighborhood are md = p/3 and mb = 4 – p. also, suppose that transactions costs are low, so that the consumers and the firm can bargain. we saw that in this case, the socially-optimal level of pollution is achieved. start by computing the socially-optimal p. then, for each of the following cases, compute the amount of money transferred through the bargaining process, and indicate who pays whom (i.e., whether consumers pay the firm, or vice versa). also, compute the gains to each party relative to the status quo (i.e., the starting point of the bargaining process).a)consumers have the right to clean air; firm is dominant in the bargaining process.b)consumers have the right to clean air; consumers are dominant in the bargaining process.c)firm has the right to pollute; firm is dominant in the bargaining process.d)firm has the right to pollute; consumers are dominant in the bargaining proces

Which of the following is not a characteristic of a weak economy? a. a low employment rateb. a high inflation ratec. a decreased gdpd. a high unemployment rate

En major recording acts are able to play at the stadium. if the average profit margin for a concert is $175,000, how much would the stadium clear for all of these events combined?