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Suppose the market demand for pizza is Qd = 300-20P and the market supply of pizza is Qs= -100 + 20 P where P= price (per pizza)
a. At equilibrium how many pizzas will be bought and sold? What is the equilibrium price? Calculate elasticity of demand and supply at equilibrium.
b. What would happen if the sellers set the price at $15 per pizza? Calculate price elasticity of demand and supply at this point.
Which one is more effective comparing with the tools of fiscal policy?
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Suppose you have the following information about an economy: Checkable bank deposits: $300,000 Currency in bank vaults: $20,000 Currency held by the public: $40,000 Reserves held at the central bank: $20,000 Traveler's Checks: $10,000 Savings Deposit..
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