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Q. Classical model and the long-term Phillips curve? In classical model, L and real wage are determined from equilibrium conditions in the labor market. L and W/P, hence, are o
What will happen to the shape of the money demand curve if the checking accounts bear interest? will it still slope down if the interest of the checking account is fixed while the
Income and Substitution Effects of a Price Change Indifference curve analysis can be used to separate the income effect (IE) from substitution effect (SE). This is shown in Fig
ABSOLUTE ADVANTAGE
New technology was just invented that decreases the cost of planting and harvesting soybeans: show the effect of this on the soybean market. Show the effect of that on the tofu mar
Which of the following would indicate the beginnings of an expansion of the economy? a. Fewer new firms are started. b. Stock market prices decline c. Consumer confidence improves
Fiscal Policy An Increase in Government Spending: Figure 1 Let us examine how an increase in government spending affects the interest rate and the level of income.
Suppose you have the following information about a closed economy: C = 50 + 0.80 (Y-T) I = 200 G = 100 a) Find out the equilibrium level of income. b) Suppose G in
Money is generally considered to have three economic functions: A medium of exchange. This is its most significant role. Without money we would live in a barter economy wher
THE MULTIPLIER ANALYSIS Multiplier analysis explains what happens to circular flow of economic life when the behavior of one of the sectors or the components of aggregate dema
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