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Assume the residents of an economy spend all of their income on cauliflower, broccoli and carrots.
In 2003 they buy100 heads of cauliflowers for Rs. 200; 50 bunch of broccoli for Rs. 75 and 500 carrots for Rs. 50. In 2004 they buy 75 heads of cauliflower for Rs. 225; 80 bunches of broccoli for Rs. 120 and 500 carrots for Rs. 100. If the base year is 2003, what is the CPI in both the years?
What is the inflation rate in 2004?
Christina Romer and Jared Bernstein in "The Job Impact of the American Recovery and Reinvestment Plan" calibrated the impact of the proposed expansionary fiscal policy (we know it
Q. How much money can banks create? Does that mean that banks can create an unlimited amount of money? No the answer is no - it would require them to lend an unlimited amount o
Question 1: Consider a closed economy with no government sector in which consumption (C) is related to income (Y) by the equation: C = A + bY (a) What is the marginal pr
The final and most important part of the methodology is the impulse response functions which will provide the most information with regards to the aim of the project. In order to a
What is independent monetary policy Advantages: First, in a freely-floating exchange rate, the exchange rate must move down or up to correct a payments imbalance. Second, monet
Derive the following equilibrium for the IS-LM model:
A firm with two factories, one in Michigan and one in Texas, has decided that it should produce a total of 500 units to maximize profit. The firm is currently producing 200 units i
explain the stages and various coordination mechanisms involved in policy processes.
A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bre
Another area where monetarists differ from Keynesians is money supply and interest rates. In the Keynesian analysis with less than full employment level equilibrium, the interest r
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