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Explain why a perfectly competitive firm does not expand its sales without limit if its horizontal demand curve indicates that it can sell as much as desires at the current market price.
Q. Classical model of the labor market? We begin by explaining the classical model of the labor market. The demand for labor L D is assumed to be inversely re
Q. How commercial banks create money? Commercial banks clearly can't influence the amount of currency in economy or monetary base because they aren't allowed to print money. Th
Explain about the circular-flow of economic activities. Circular-Flow of Economic Activities: Economic Agents: a. Households b. Firms Where they interact:
Q. Money market with inflation and constant money supply growth? If π M = π and π e = π, both IS- and LM-curve will be fixed. Figure: The money market with inflatio
Consider the following model of an economy that begins in a macro equilibrium,
Q. What do you mean by Exchange rate? Exchange rate is defined as the price of one unit of currency in terms of another currency. If one euro costs 1.5 USD then 1 USD costs 1/1
An economy's IS and LM curves are given by the following equations: with Y indicating output (income), c indicating the marginal propensity to consume, I investment, G gove
does central bank determine money supply in the economy
A system of private property rights A. enhances economic growth by creating incentives to the Fed to maintain stable prices. B. enhances economic growth by increasing the pro
Q. Overnight rates and interest rates with longer maturity? By controlling overnight interest rates, central bank will affect interest rates with longer maturity. Main reason f
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