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If there are economies of scope and if the price for each product equals marginal cost, is it possible for a firm to cover all its costs? If the firm's average cost of production declines the more it produces, can a price equal to marginal cost ever cover all its costs?
what does phillip curve signify? how do you reconcile the difference in the shap of the curve in the short run and the long run?
Interest rate determination The real interest rate r will be equal to the equilibrium real interest rate In the classical model we define equil
If taxes and government expenditures were constant and did not vary with income, then: A. passive deficits would increase. B. structural deficits would increase. C. passive deficit
Outline briefly a. How people make decisions? b. How they interact? c. How economy as a whole works? 1. Give three examples of important trade offs, th
Limitations of the theory of rational expectations: Critics of this theory note that if policy makers have more information about the economy or their own actions than d
Buying government securities: When a commercial bank buys government bonds, the effect is substantially the same as that of lending - new money is created. To
When investment banks underwrite IPOs, they are typically sell stock for 5-10 percent more than they pay for it. When they underwrite stock for companies that are already public, t
The consumption function of an economy is given by c = 200+0.75(y-t) And the investment function by I = 200 = - 25r. Government purchases G and taxes Τ are both 100. T
Determine the example of Currency inside banks is not money An example may also illustrate this important fact: Eric has 100 euro - this amount is obviously part of the
What is Frictional unemployment Individuals who are temporarily unemployed when transiting between jobs or just entering labour market. This kind is typically short in durat
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