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Why does a price index based on constant weights tend to overstate inflation in periods after the base year when the price of one good is rising quickly compared to other goods?
Because people tend to buy cheaper substitutes instead of the good whose price is quickly increasing. But the constant-weight index includes the similar quantities of the expensive goods.
Static and dynamic multgipier
Consider an infinitely repeated prisoner's dilemma game by two players. The resultant payoffs at each stage by the actions of two players are given below in the table (payoffs are
EXPLAIN KINKED DEMAND CURVE
Nonmetals tend to gain electrons. A-Metals tend to lose electrons. B-Atoms have the natural tendency to C-fill their outermost shells. All of the above. D-
Government Budget Deficits Governments have been traditionally spending more what they could earn by way of taxes and sale of economic goods and services produced by them. The
Features of monopolistic competition: Large number of firms in the industry. There are many small firms each supplying only a small share of the total market output. Hence, no
What is Laffer curve The Laffer curve is named after Professor Art Laffer who suggested that as taxes enhanced from fairly low levels, tax revenue received by the government wo
Your firms production function : Q=4K^1/2L^1/2 Suppose that the price of labor is $5 and the price of capital is $20. Your firm desires to produce 200 units of output. How much
Theory of revenue
concept of the law of supply
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