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Q. Describe the Keynes motivation?
Keynes' motivation: In good times, when Y is high (above its trend), national income is high (above it trend). Consumers will take this opportunity to buy things they otherwise can't afford. In bad times, conversely consumers simply can't buy things they would have bought if income was higher.
Enumerate the statement- Interest rates with longer maturity Since loans with longer maturities are substitutes for overnight loans, the central bank also has some control o
The Pigou effect: A) suggests that as prices fall and real money balances rise, consumers should feel less wealthy and spend less. B) suggests that as prices fall and real mo
Suppose a new production method will be implemented if a hypothesis test supports the conclusion that the new method reduces the mean operating cost per hour. a. State the appro
The following Cobb-Douglas production function is used to describe the output generated by a local government maintenance agency. Q = αL β1 K β2 E β3 Where L represents numb
Q. What is Inflation? Inflation between two points in time is defined as percentage increase of price index between these two points in time. Comments: Price inde
Suppose Zippy's Banana Juice can produce according the following long-run production function. Q = 5 L 2 + 20 K - 0.4 K 2 where Q is gallons of juice per hour, L is labor hours,
Determine the main target of monetary policy Since 1997 'official' main target of monetary policy has been to 'hit' inflation rate target set by government. Though since the o
The financial crisis that hit the United States first and then the world economy starting in fall 2007 meant that the future prospects of many firms looked gloomy at best for some
use a graph of the classical labour market to illustrate the effects of a real wage existing in the market that is lower thhan the equilibrium real wage
Q. What do you mean by Capital Flows? With free capital flows, this is a very unreasonable assumption. If we domestic interest rate increase against the foreign interest rates,
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