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The pigou effect, also called the real balance effect, is named after the well known Cambridge school economist Arthur Cecil pigou who had first clearly formulated the relationship
Interest and the Keynesian Liquidity Preference Theory Interest is a factor income in that it is considered to be payment to or return on capital in the sense that it is payme
Average Propensity to Consume The average Propensity to Consume [APC] is defined as the fraction of aggregate national income which is devoted to consumption. If consumptio
Disadvantages of the Planned System The centrally planned economies suffer from the following limitations: Lack of choice: Consumers have little influence over what is p
Open Market Operations Open market operations is another traditional or quantitative weapon at the disposal of central bank to control the volume of aggregate bank credit in t
NON-ACCELERATING INFLATION RATE OF UNEMPLOYMENT During 1970s economists encountered a puzzle in the sense that inflation and unemployment data did not fit into the Phi
Antitrust authorities at the Federal Trade Commission are reviewing your company's recent merger with a rival firm. The FTC is concerned that the merger of two rival firms in the s
demand function is q=4850 - 5p(1) + 1.5p(2) + 0.1 Y WHEN Y=10000 p(1)=200 p(2)= 100 find income elasticity of demand for p(1)
The supply of money Refers to the total amount of money in the economy. Most countries of the world have two measures of the money stock - broad money supply and narro
Substitution Effect on law of demand When price of a commodity falls it becomes comparatively cheaper if price of all other related goods, particularly of substitutes, remain c
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