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Q. What do you mean by multiplier effect? Loans and deposits in banks give rise to a significant multiplier effect. We use a simple instance to explain this effect. Consider th
In 2010, Forbes magazine listed Bill Gates, the founder of Microsoft, as the richest person in the United States. His personal wealth was estimated to be $53 billion. If there were
Why does a production possibilities frontier with increasing opportunity costs have a bowed-out shape? The curve is bowed-out because some resources are better suited for the
The Transmission Mechanism The mechanism by which the changes in monetary policy affect aggregate demand is called 'transmission mechanism'. Two stages in transmission mechanis
A clinic uses doctors and nurses optimally and is servicing the maximum number of patients given a limited annual payroll. The last doctor hired treated 1,600 extra patients in a y
Aggregate Supply in the Short Run Production takes place in business sector on the basis of an expected price for its output. However, costs are incurred in anticipation of sa
Suppose that Mr. Chauncey Gardener consumes two goods, X 1 and X 2 .His preferences can be described by the following utility function: U = X 1 0.5 X 2 0.5 He
There are very examples of perfect competition. Yet in the study of industrial organization, significant discussion is focused on this type of market. Explain why.
The market demand for a factor The market demand curve for any input is not simply the horizontal summation of the individual demand curves of all the firms. This is due to th
What are the effects of neutral inflation
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