#2. (a) Let and

If consumers were forced to pay $13 per unit for this good in the graph above instead of the equilibrium price of $10 per unit, consumer surplus would fall from:

Refer to the graph.  Suppose the economy is at SAS1 and AD2. What is a possible way the economy can return to potential output? What dynamic price level feedback effect could prevent the return to potential output? How would the dynamic price level feedback effect show up in the graph?

Utilize the following graph. Assume that initially the market is at an equilibrium price of $6 per pound and an equilibrium quantity of 40 pounds. Suppose that the government institutes a $2 per-pound tax on this product. Given this information how much tax revenue will the government collect?  

In what way is individual debt similar to government debt?

Suppose that we are in a real estate market where the luxury homes being sold are vacation homes where people use them for 1 month out of the year.  Suppose that one vacation home is selling for $500,000 and another is selling for $5,000,000.   Answer the following questions:   Which luxury vacation home should have the greater price elasticity of demand?   If we are comparing the non-vacation home real estate market versus the vacation home real estate market, which real estate market should have the greater price elasticity of demand?

Suppose that the equilibrium exchange rate (Euro/$) is .60  and the The Federal Reserve decides to fix the exchange rate at .40.   What will the Federal Reserve have to do in order to maintain this fixed exchange rate?

Exchange rate expectations in the foreign exchange market:

Suppose that current output is less than the central bank’s projection for long run potential output. The Taylor Rule guides the central bank to do the following:

Which is the main neurotransmitter in post-ganglionic nerve terminals of the parasympathetic nervous system?