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Filbert and Lychee have convex indifference curves. Note Filbert is indifferent between baskets (3, 2) and (4, 1)--these are x, y coordinates. Lychee is indifferent between baskets (1, 4) and (2, 3) Not that all four baskets lie along a straight line.
a.) Can you determine whether Filbert and Lychee have identical tastes?
b.) Suppose that Filbert chooses (4,1) and Lychee chooses basket (1, 4). Can you determine whether Filbert and Lychee pay identical prices for the goods they buy?
Q. Investment demand of the AS-AD model? Investment demand. As long as we keep nominal interest rate (and thus real interest rates) constant, there is no reason for demand for
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The AS-AD model with inflation When we remove assumption of constant prices to allow varying real wages. Resulting model was known as AS-AD model. Similarly we now remove the a
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