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Q. Explain the difference between the following two expressions:
Y = C(Yd) + I + G + CA(EP*/P, Yd) and
Y = C + I +G + CA
Answer: The first expression corresponds to a behavioral equation and thus may express equilibrium conditions for the output market or the aggregate desired demand for output. The second equation is merely an identity that is always true.
Q. "It is in the interest of each depositor to withdraw her money from a bank if all other depositors are doing the same, even when the bank's assets are sound." Discuss. As par
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INTERNATIONAL TRADE can be understood as follows By the international trade, we signify the exchange of goods and services between different countries. For any individual count
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Q. What are the main factors determining the aggregate money demand? Answer: Three major factors: the price level, interest rate and real national income. A increase i
The recessionary gap in a country is $1 trillion. The spending multiplier is 5. For every $50 billion borrowed, interest rates increase by 0.1 %. For every 0.1% increase in interes
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