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What are the main weaknesses of using demand-side policies?
Trade-off issues
a) Growth and low unemployment often come with inflation
b) Government stimulatory policies might be come from deficit spending and thus enhanced debt
c) Growth may result in current account problems (HL; use MPM)
d) Growth and inflation, together with rising imports may lead to downward pressure on the exchange rate
why risk averse consumers pay premium for insurance to convert an uncertain outcome to a certain one?
The owner of a firm Mr. Rajneesh expects to make a profit of Rs.5,50,000, Rs.6,50,000, Rs.7,50,000 and Rs.8,50,000 at the end of the 1st, 2nd, 3rd and 4th year respectively. Rajne
market failure
Average Total Cost (ATC): ATC is the total cost per unit of output. ATC = TC/y = (TFC + TVC)/y = AFC +AVC ATC falls sharply at the beginning of the production process because
advantages and disadvantages
Suppose that doctors shift away from a fee-per-visit system and are instead paid set annual salaries. What effect will this have on the supply and demand situation for the health
is south african economic system more allocative efficient?
What is the theory of second best
Suppose a government uses an expansionary fiscal policy to get out of a recession. Use the IS/LM model and the IS-PC-MR model to explain what monetary policy to pursue.
1. Describe why government regulation is required, citing the major reasons for government involvement in a market economy. 2. Justify the rationale for the intervention of gove
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