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Q. Determination of variables in AS-AD model?
Once Y and P are determined, all other endogenous variables would be determined as well. Interest rate is determined by money market diagram and components of GDP are either exogenous or they rely on R or Y. W is constant and as P is determined, so is real wage. Then L and unemployment rate is determined as well.
Q. How much money can banks create? Does that mean that banks can create an unlimited amount of money? No the answer is no - it would require them to lend an unlimited amount o
Each Home Depot store must decide how much paint to order each month. From historical records, they know that the amount of paint they sell during May is distributed as follows: th
neoclassical
Discuss how income flows in governed economy, frugal economy, spend their economy.
Suppose that this year's the money supply is $500 billion, nominal GDP is $10 trillion, and real GDP is $5trillion. a. What is the price level? b. What is the velocity of money
Long Run Equilibrium:Graphical Analysis In the long run the natural rate of output is the level of output to which the economy will tend to adjust in the long run. This indicat
Consider the following: The city council has just approved the construction of a water park in your town. You are responsible for studying the impact of the new water park on the l
Application of Revealed Preference Approach It has been strongly argued, especially by Sir John Hicks, that one major advantage of revealed preference theory is that it is expl
The demand for nominal balances rises with the price level. At the similar time inflation causes the real demand for money to fall. Describe how these two assertions can be both co
A bakery has fixed costs of $10 per day and variable costs of $1 per loaf. Its oven can handle up to 50 loaves a day and it is impossible to obtain additional capacity. Sketch the
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