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Q. Nominal interest rate and expected inflation?
When we have inflation, we can't, of course, presume that expected inflation is zero. So real interest rate will no longer be equal to nominal interest rate and we should use R = r + pe. Expected inflation pe is exogenous (even though not essentially constant. In more advanced Keynesian models you would find numerous assumptions on how expectations are formed.
OPEC oil cartel becomes subject to this tension or conflict such that the cartel gives way to a more competitive oil market resulting in a dramatic decrease in the world oil price.
Neo-classical thinking on growth: Neo-classical thinking on growth is owed to the Robert Solow whose exogenous growth models in the of the mid-20th century remained
To really understand it, compute the following price elasticities of demand: · The price of a laptop increases by 20% and there is a 40% drop in the quantity dem
Consider the following homogenous difference equation: xt=b0+b1xt-1 a) Iterate backwards xt can be written in terms of xt-2. b) Now show xt can be written in terms of xt-3 a
a small country produces 5000 units of output and has a money suplly of $2000. if citizens want to hold 10% of their income in money ie k=0.1 what are v, $gnp, p and real money sup
Question 1 What would be the effect of an increase in Australia's net exports on the aggregate demand curve? Would an increase in net exports affect the RBA's monetary policy
Q. Explain the problem with IS-LM model? The starting point of AS-AD model is an assumption in IS-LM model (and in the cross model) that limits its usefulness. This is an assum
economic issues
Suppose there is a simultaneous increase in the demand for diamonds and increase in the supply of diamonds. Which of the following will occur as a result of these simultaneous even
assume the cost of a market basket in 2008 is 1717.0. Calculate the cost of the same basket of goods and services in 2007. Price index in 2008 was 100 and price index in 2007 was
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