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According to the neo-classical economic theory, the market is a natural, self-regulating system that tends automatically towards the full employment equilibrium of supply and demand. What are the assumptions underlying this view? According to Keynes, there is no such tendency in the economy, but, on the contrary, aggregate effective demand is likely to be a problem, preventing movement to the full employment level. Why does he think this? Why is this disagreement important?
Mention the four assumptions for the Monopolistic competition model.
Explain International Monetary System
In a perfect capital market, advices for a corporate financial manager on making capital structure decisions.
Use the data below to find out the growth of income per person (over the entire period, not an annual basis) between the two years listed.
Draw a current budget constraint for an assumed single mother (net of child care costs) who loves leisure. Draw the new constraint. Discuss the likely effects on labor force participation and hours of work.
Suppose the market for widgets can be described by the following equations: What is the equilibrium price and quantity?
Explain why a monopolist will never set a price (and produce the corresponding output) at which the demand is price-inelastic.
Suppose that in a city there are 100 identical self-service gasoline stations selling the same type of gasoline.
What money supply must the Bank of Canada set next year if it wants to keep the price level stable? What money supply must the Bank of Canada set next year if it wants inflation of the ten percent?
Suppose that American households change their tastes such that they want to save more at every level of income.
What is the opportunity cost of going to a doctor to be examined for skin cancer? Would eliminating research reduce or increase the cost of U.S. health care?
What are those key objectives and what are the key tools the Fed plans to use to achieve those objectives?
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