Read the chapter and answer: Use a concrete example showing the five-step process by which management science uses a simulation model to solve real-world problems.   Guidance on report writing First, each student must submit ONE report. Students should a keep a copy of assignment submitted. Secondly, the report should have an introduction, applications to […]

What is the difference between the budget deficit and the primary budget deficit? Use the government’s budget constraint to express the relationship between the budget deficit and the primary budget deficit algebraically.

Gross federal debt was greater than $16 trillion at the end of 2012. Historically, interest rates on Treasury bonds have been considerably higher than they were in 2012. Assume, for simplicity, that the government pays the same interest rate on all outstanding debt. What is the approximate annual interest payment if the debt is $16

The CBO estimates that the federal budget deficit was $1.3 trillion in 2012. If gross federal debt were $16 trillion then for each of the interest rates given in problem 1.4, calculate the primary budget deficit and the difference between the deficit and the primary budget deficit.

Briefly explain whether you agree with the following statement: “Because the government can always print more money, the size of the budget deficit doesn’t matter.” The dollar value of the U.S. public debt is the highest in U.S. history and the highest, in absolute terms, in the world. Is this fact a reason to be

In 2009, the stock market value of most firms was lower than it was in 2006. a. Why would the market value of most firms have fallen?                       b. The growth rate of non-residential investment steadily fell from 8.0% in 2006 to -18.1% in 2009. Is this decline consistent with Tobin’s q model of investment? Briefly explain.

The following graph shows the marginal product of capital and the user cost of capital. Assume that the economy is currently at point A, with the capital stock equal to K* a. All other things being equal, how would you expect Federal Reserve policy that increases the money supply to change the user cost of capital? What

John Maynard Keynes described firms as having “animal spirits,” meaning that they often make decisions based on emotion as much as on more objective factors. a. How might animal spirits explain the volatility of investment relative to consumption? b. Are consumers also sometimes motivated by emotion? If so, why isn’t consumption more volatile?

Based on rapidly falling prices of competitors’photovoltaic modules used in the production of solar panels, General Electric (GE) announced in July 2012 that it was stopping production on what was supposed to be the largest solar factory in the United States. In a Forbes article, Danielle Merfeld, GE’s general manager for solar technologies, is quoted

Using the St. Louis Federal Reserve Bank’s FRED database (http://research.stlouisfed.org/ fred2/) examine the differences in consumption behavior between the United Kingdom and the United States. a. Download annual data from 1955 to the present on nominal private final consumption expenditure in the United Kingdom (GBRPFCEADSMEI) and the United States (USAPFCEADSMEI). For the same time period,