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(a) Describe clearly how the interest rate is determined in:
(i) Loanable Funds Framework; and
(ii) Liquidity Preference Framework.
(b) According to Liquidity preference analysis an increase in money supply always leads to a fall in the rate of interest.
Describe using diagrams, how an increase in money supply leads to a fall in the interest rate.(c) Critically assess the statement in part (b)
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The price of milk is usually much less expensive in a grocery store versus a convenience store. Using economic terminology, explain why people purchase milk at convenience stores.
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what is the use of models in economics?
Much of undergraduate macroeconomic theory is discussed on the assumption that, in the short run, the expectations of economic agents about the future values of macroeconomic varia
thoery explanation
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What simplifying assumptions does the traditional macroeconomic model make (in addition to those made in the NIPA)? The simplifying assumptions are: 1) The household and i
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