The COVID-19 pandemic has substantially affected the Canadian economy in several dimensions.As the Canadian governments, both federal and provincial, have issued various forms of "stay home"instructions, workers have to work from home. Working from home has two effects: firms are nowless productive and hence the current TFP z declines; labor supply N³ (r) declines. In addition,consumers can only go grocery once a week and hence consumption demand Cd(r) declines for anylevel of interest rate and income. Answer the following questions.1.Use a real business cycle model that we studied in Chapter 13 to analyze theimpact of Covid-19 in terms of output, employment, consumption, investment, wage, interestrate, money demand, and price. Make sure you show three figures: A figure illustratingthe goods market, a figure illustrating the labor market, and a figure illustrating the moneymarket. (In this question we assume that the change in output supply dominates the changein output demand, and the change in labor demand dominates the change in labor supply.)

The objective of the question is to analyze the impact of Covid-19 on the Canadian economy using a…

Answered: The COVID-19 pandemic has substantially…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The COVID-19 pandemic has substantially affected the Canadian economy in several dimensions.As the Canadian governments, both federal and provincial, have issued various forms of “stay home”instructions, workers have to work from home. Working from home has two effects: firms are nowless productive and hence the current TFP z declines; labor supply N s(r) declines. In addition,consumers can only go grocery once a week and hence consumption demand Cd(r) declines for anylevel of interest rate and income. Answer the following question. Use a real business cycle model that we studied in Chapter 13 to analyze theimpact of Covid-19 in terms of output, employment, consumption, investment, wage, interestrate, money demand, and price. Make sure you show three figures: A figure illustratingthe goods market, a figure illustrating the labor market, and a figure illustrating the moneymarket. (In this question we assume that the change in output supply dominates the changein output demand, and the…
The COVID-19 pandemic has substantially affected the Canadian economy in several dimensions. As the Canadian governments, both federal and provincial, have issued various forms of "stay home" instructions, workers have to work from home. Working from home has two effects: firms are now less productive and hence the current TFP z declines; labor supply N³ (r) declines. In addition, consumers can only go grocery once a week and hence consumption demand Cd(r) declines for any level of interest rate and income. Answer the following questions. 1. Use a real business cycle model that we studied in Chapter 13 to analyze the impact of Covid-19 in terms of output, employment, consumption, investment, wage, interest rate, money demand, and price. Make sure you show three figures: A figure illustrating the goods market, a figure illustrating the labor market, and a figure illustrating the money market. (In this question we assume that the change in output supply dominates the change in output…
The COVID-19 pandemic severely affected the Australian restaurant industry. Also, Government policy restricting the seating capacity of restaurants resulted in a drastic decline in the number of people dining in restaurants. As the number of COVID-19 cases is steadily decreasing, the government has removed the restriction and, in addition, offered adults in every household a $40 dining voucher to pay part of their restaurant bills. What would be the short-term impact of the government’s $40 dining voucher policy on the equilibrium price and quantity of restaurant meals? Assume that the restaurant industry is competitive and currently in long-run equilibrium. Illustrate your answer with either DIAGRAM A or DIAGRAM B.
The COVID-19 pandemic has increased sales at large grocery stores. How can store managers influence customer perceptions of service quality in a post-pandemic economy?
Bird Flu Hits Malaysia A deadly strain of bird flu that has killed many people in Asia this year has hit Malaysia. The outbreak is a blow for Malaysias thriving poultry industry. Neighboring countries which import live chickens and ducks from Malaysia suspended all imports, driving poultry stocks down. The government has confirmed the continuing ability of the H5N1 virus to transmit to people. To avoid the spread of the disease, the chickens and ducks in the areas affected by the H5N1 virus are culled. This has reduced the supply of chicken in the country. The bird flu scare has caused a drastic change in consumer diet from chicken to other substitutes such as other meats and fish. This has resulted in lower chicken production that has further plunged the poultry industry into uncertainty. The drop in business may also force some chicken farmers to close shop, further decreasing supply. The government is now concerned over a looming shortage in supply of chicken when consumption…
You are hired to work as economic advisor to His Excellency the PrimeMinister of Xanadu, an imaginary country that suffers from a severe recession condition due tothe Novel Coronavirus Pneumonia (COVID-19) pandemic.What are your recommendations for an urgent plan to rescue the economy of Xanadu?Specifically, what government policy actions are required? Explain to His Excellency thepossible drawbacks of your recommended course of actions.
Congratulations! You are hired to work as economic advisor to His Excellency the Prime Minister of Xanadu, an imaginary country that suffers from a severe recession condition due to the Novel Coronavirus Pneumonia (COVID-19) pandemic. What are your recommendations for an urgent plan to rescue the economy of Xanadu? Specifically, what government policy actions are required? Explain to His Excellency the possible drawbacks of your recommended course of actions.
Companies in the steel and alumina industry may react to an increase in the price of crude oil by increasing their prices to reflect the increased cost of production. This, in turn, may lead to higher prices for consumers. Alternatively, companies may seek to reduce their production costs by implementing cost-saving measures, such as switching to alternative sources of energy or reducing their energy consumption. In some cases, companies may seek government intervention, such as relaxing import controls or offering subsidies, to help them cope with the increased cost of production. Ultimately, the reaction of companies in the steel and alumina industry will depend on a range of factors, including the specific circumstances of each company, the availability of alternative sources of energy, and the actions of their competitors. An increase in the price of crude oil will increase the cost of production for the steel and alumina industry, which will increase the price of their products…
Case: As part of the most recent collective bargaining agreement with employees, an employer must offer medical insurance at "reasonable, non-profit rates." The employer plans to self-insure in place of using a private insurance company. Statistical evidence suggests that the average household currently spends $450 per year for medical bills and $80 for health screening and routine check-ups. Administrative costs are expected to average $30 per family. The collective bargaining agreement dictates that the plan's coverages and rates be fixed for a period of two years. The auditor considers the choice of the plan to be extremely important. Consequently, the auditor has asked you to evaluate the three proposals listed below. 1. Proposal A would charge a $350 premium with no deductible. Coverage is extended to pre-existing conditions, but to cover the non-deductible clause, health screening and routine check-ups are not covered. 2. Proposal B charges a $250 premium with a $200…
The following data pertain to products A and B, both of which are purchased by Madame X. Initially, the prices of the products and quantities consumed are: PA = $10, QA = 3, PB = $10, QB = 7. Madame X has $100 to spend per time period. After a reduction in price of B, the prices and quantities consumed are: PA = $10, QA = 2.5, PB = $5, QB = 15. Assume that Madame X maximizes utility under both price conditions above. Also, note that if after the price reduction enough income were taken away from Madame X to put her back on the original indifference curve, she would consume this combination of A and B: QA = 1.5, QB = 9 Determine the change in consumption rate of good B due to (1) the substitution effect and (2) the income effect. Determine if product B is a normal, inferior, or Giffen good. Explain.
Private enterprises often oppose environmental regulation because it raises cost of operation, reducing profits. Suppose that Belville, KS has ten dairy farms whose manure runoff pollutes the River. The table below gives information about the operation of each farm, identified X A 270 24 2 580 44 6. C 760 49 12 650 60 15 E 270 12 9. F 380 15 18 200 6. 13 H. 260 7 25 250 6. 35 1020 21 204 where daily milk output in gallons L daily demand for labor (in worker hours) average daily quantity of manure leaching into the river (in gallons) The wholesale price of milk (px) is $1/gallon, and the wage (pL) is $12/hour. Suppose that farms cannot adapt their individual production practices: they either remain in business if they are profitable, or they have to shut down if they are not. a) Suppose that farms can pollute as much as they want. Which farms are profitable? Assuming that unprofitable firms shut down, calculate Belville's resulting total milk output, total company profits, and total…
Plan production for a four-month period: February through May. For February and March, you should produce to exact demand forecast. For April and May, you should use overtime and inventory with a stable workforce; stable means that the number of workers needed for March will be held constant through May. However, government constraints put a maximum of 5,000 hours of overtime labor per month in April and May (zero overtime in February and March). If demand exceeds supply, then backorders occur. There are 100 workers on January 31. You are given the following demand forecast: February, 80,000; March, 64,000; April, 100,000; May, 40,000. Productivity is four units per worker hour, eight hours per day, 20 days per month. Assume zero inventory on February 1. Costs are:hiring, $50 per new worker; layoff, $70 per worker laid off; inventory holding, $10 per unit-month; straight-time labor, $10 per hour; over time, $15 per hour; backorder, $20 per unit. Find the total cost of this plan.

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