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Direct control and Moral Suasion
Without actually using the above weapons, the central bank can attempt simply to use "moral suasion" to persuade the commercial banks to restrict credit when they wish to limit monetary expansion. Its effectiveness depends on the co-operation of the commercial banks.
Peanut butter monopolist Calvé supplies peanut butter to Albert Heijn in an isolated village. The supermarket is a monopolist in the village. Demand for peanut butter is given by:
What is Demand theory Demand theory demonstrates the relationship between demand for services andgoods. Demand theory is the building block of demand curve- a curve which estab
Occurrence of Stagflation Two possible theoretical explanations can be given for the occurrence of stagflation almost all over the world. The first explanation follows directly
Country A has a fixed exchange rate with country B. Due to a recession in country B, demand for A's goods falls. Draw what would happen on the graph below. On the graphs, draw what
Features of this system The mixed economy includes elements of both market and planned economies. The government operates and controls the public sector, which typically cons
what is the goal of firm
PROBLEMS OF USING PER CAPITA INCOME TO COMPARE STANDARD OF LIVING OVER TIME 1) The composition of output may change. e.g. more defence-related goods may be produced and
examples
Real Rigidities in the Credit Market How imperfections in the goods markets enable firms to set prices so as to generate price rigidities, e.g., because of countercy
Currency Swaps If the currency of one country is not convertible, the central banks o f the two countries can exchange their currencies, and the country with the non-convertib
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