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Assume that government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of real GDP demanded for each of the following values of the MPC. Then, calculate the change if the government, instead of reducing its purchases, increased autonomous net taxes by $10 billion. a. 0.9 b. 0.8 c. 0.75 d. 0.6.
Your company has asked you to analyze two mutually exclusive projects for the coming year. Project A will have an initial outlay of $7,200. Project B will cost $6,800. Both project
Assume that Jimmy Cash has $2100 in his checking account and uses his checking card to withdraw $210 from his ATM machine. By what amount did M1 change from this individual transac
Suppose that an individual stock's return is normally distributed with a mean of 9% and a standard deviation of 4%. What is the probability that the stock's return will be less tha
Aggregate demand with inflation In previous versions of Keynesian model, Components of aggregate demand did not depend on P. In IS-LM and in AS-AD models, investments depended
Describe in detail about Exchange rate systems Various countries have different exchange rate systems. The most significant characteristic of an exchange rate system is to what
Q. Explain the problem with IS-LM model? The starting point of AS-AD model is an assumption in IS-LM model (and in the cross model) that limits its usefulness. This is an assum
using a graph of the classical labour market,illustrate the effects of a real wage existing in the market that is lower than the equilibrium real wage.What will eventually happen i
Q. Explain the classical motivation? The classical motivation: Consumers want to smooth their consumption over time. In good times, consumers know that it is a temporary stat
The monetary system in any economy facilitates trade and allows people to trade more efficiently, as compared to a barter economy. In the United States, the monetary authority is t
explain money market equilibrium?
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