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Relation between nominal interest rate, real interest rate and inflation
If we denote the nominal interest rate by R, the real rate by r and the expected inflation by pe then the real interest rate is defined by:
r= R- pe or R= r+ pe
what cause balance of payment curve to shift
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While referring to the "EYE on YOUR LIFE" section on page 183 of the textbook, apply this concept to your life. Develop your own policy position on price floors and price ceilings.
note on Marris growth maximizing model
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