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In real life, the operation of simple multiplier is affected by many leakages. Leakages in the multiplier arise out of the following reasons: (1) Saving: If all the income is sp
How could utility theory help us understand the difference between a federal income tax and a federal sales tax on consumer consumption patterns?
Assume an economy that is operating above full employment. A. Draw a correctly labeled AD/AS graph showing: i. the problem in the economy ii. current price level and output iii. fu
Using the Mundell-Fleming model, describe how an increase in a country’s risk premium on the world interest rate can result in a higher level of real income. Under what circumstanc
There are three industrial firms in a quaint town of South Orange where the municipal government wants to reduce pollution to 120 units from uncontrolled level of 210 units. Three
1. Assume the required reserve-deposit ratio is 12%, and the currency-deposit ratio is 38%. How much would money supply change if the Fed made open market purchases of $100 millio
Question 1 Consider an investor who has the von Neumann-Morgenstern utility index u(x ) = 3 + 4√ x An investment provides income according to two possible future scenari
Recognize which of the following purchases is counted as a part of NI: a) Tata motors purchases tire from Good year to equip latest Indica. b) Tata motors purchases tires fr
Suppose that between January 2011 and January 2012 the total number of people employed and the unemployment rate both fell. Briefly explain how this is possible. [2 marks]
Whenever real GDP declines, nominal GDP must also decline
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