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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 real investment to change. We will expect nominal investments to increase by the same percentage as price level.
Government consumption. G is an exogenous real variable and we expect no dependence on P by same argument as for private consumption.
Index number formulas
If the AD excess is $300 billion and the MPC is 0.8 how much fiscal restraint is required? What does the "debt held by the public" mean?
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 design-build-operate engineering company burrowed $6 million for 3 years so that in can purchase new equipment. The interest is compounded and the total amount owed will be paid
What is Purchasing power One problem in using exchange rate when comparing GDP per capita between countries is that is fluctuates quite a lot. A way of avoiding dependence on
You need to choose between two replacement compressor options. One costs $6400 and is 70% efficient. The other costs $9800 and is 85% efficient. Both have an average life of 8 year
The demand for textbooks is Q=200-P+25U-50Pbeer. Assume that the unemployment rate U is 8 and the price of beer P beer is $2. When the average price of a textbook is P=$100, the el
Give a brief description of the transmission mechanism 1. When the central bank target rate increases, other interest rates in the economy will increase (and the money supply
Q. Describe Exports and imports in AS-AD model? Exports and imports. This is more difficult to justify owing to exchange rate. Suppose that we have a flexible exchange rate a
Elplain the casual factors of the traditional business cycle and its effects on sectors of the economy
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