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Application of Theory of Consumer Behavior As already discussed earlier, the theory is an important tool to interpret and analyse demand curves. Apart from its usefulness as a
Suppose that the demand curve for apples is given by Qd = 140 - 5P, where Qd is the number of pounds demanded per year and p is the price per pound. The supply of apples can be de
Augmented Saving An alternative way of determining equilibrium GDP is to find the level of income where the sum of desired injections equals the sum of desired leakages. Desi
What is Monetary base The monetary base is defined as the total value of all currency (banknotes and coins) outside the central bank and commercial banks' (net) reserves with t
Suppose gasoline and hybrid vehicles are substitutes. Draw a graph indicating what will happen in the market for hybrid vehicles if the price of gasoline increases. Be sure to labe
If the opportunity cost of producing extra units of one good (expressed in terms of the amount of another good that is sacrificed) remains constant, then the shape of the productio
Assume that Jimmy Cash has $2100 in his checking account and uses his checking card to withdraw $210 from his ATM machine. By what amount did M1 change from this individual transac
A restaurant/bar is analyzing its pricing of beer. It has determined that the price elasticity of demand for beer is 0.8, the cross-price elasticity for wine with respect to the pr
Q. What do you mean by Capital Flows? With free capital flows, this is a very unreasonable assumption. If we domestic interest rate increase against the foreign interest rates,
Determine about the Expected inflation Note that it is changes in prices during 2008 which matter for the high real interest rate (the time period when your deposit is earning
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