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What are the advantages of leaving resource allocation to price allocation?
Ans) The 5 benefits are Neutral, Flexible, Freedom of choice, No administrative cost and lastly Diminished incentives. Distinguish among diminishing returns and diseconomies of scale. Diseconomies of scale I guess means as you make more it becomes more costly to produce. For example, you make output 1 for $2 but output 2 for $5 thus the second one needed $3 Now let us say input for output 1 had to be doubled for input 2. One land gave output 1. Output 2 required 2 lands. Then there are not diminishing returns. Though, as second land was costing $3 there was diseconomies of scale.
Suppose that the reserve requirement is 10 percent and the balance sheet of the People's National Bank looks like the accompanying example. a. What are the required reseves of P
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#questionKeynes liquidity Preference theory stipulates that money demand is negatively related to current income and positively related to interest rate..
critically examine the keynesian theory of unemployment
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