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Q. Assumptions of the AS-AD model? The most significant change we make going from IS-LM model to AS-AD model is to allow P to be endogenous. As P was constant in IS-LM model, w
What is Treasury bills In most countries you will find many types of government bonds. An important distinction is the duration of the bond, that is, the difference between the
The aggregate demand curve shows the combinations of the price level and the level of output at which the goods and money markets are simultaneously in equilibrium. Let us now go o
Q. Describe the Keynes motivation? Keynes' motivation: In good times, when Y is high (above its trend), national income is high (above it trend). Consumers will take this opp
Macroeconomics deals with the economy as a whole. The millions of individual microeconomic decisions of the people, businesses, and government in their totality represent a nation'
What is money and what is not money If you are trying to conclude if something is money, simply consider whether it would be accepted in most stores as payment. You then realiz
Shambles, a large toy retailer, are looking at bringing out a new range of soft toys. The range under consideration is "Mythical Beasts." The "Mythical Beasts" range will cost £50
Q. Nominal interest rate and expected inflation? When we have inflation, we can't, of course, presume that expected inflation is zero. So real interest rate will no longer be e
What does the United States do better than other countries?
If the price level depends on both the current money supply and future expected money supplies, in order to stop a hyperinflation, a central bank may try to establish credibility b
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