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<title>Montreal Economic Institute :: Economic Exercises</title>
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<copyright>IEDM 2010</copyright>
<link>http://www.iedm.org/exercise_en.php</link>
<description>Exercises that are meant to illustrate the basic economic concepts and the way economists in the mainstream analytical tradition think.</description>
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<lastBuildDate>Sun, 01 Feb 2009 00:00:00 -0700</lastBuildDate>
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	<title>Hopeful subsidies</title>
	<link>http://www.iedm.org/main/show_exercise_en.php?exercise_id=54</link>
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   <pubDate>Sun, 01 Feb 2009 00:00:00 -0700</pubDate>
<description><![CDATA[ Question: Some people complain that American banks that 
			received billions of dollars from the government have not increased 
			lending ( Wall Street Journal, January 26, 2009, amplified by 
			the podcast " Wall Street Journal This Morning" on the same day).  
			If the government gives a subsidy to a firm, is there a way to be 
			sure that the subsidy will be used only for a specific purpose (like, 
			for example, manufacturing smaller cars or lending more to customers)? 
			 
			 Hint: To make the problem easier to analyze, assume that the 
			firm produces two goods or runs two activities only, X and Y, and 
			that the government sends it a check of $1 million dollar.  <a href="http://www.iedm.org/main/show_exercise_en.php?exercise_id=54">[...]</a>]]></description>
<category>Economic Exercises</category>
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