Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Why GDP is determined only by aggregate demand?
Note that we haven't said anything about the aggregate supply so far. In order to justify why GDP is determined only by aggregate demand we have to explain why supply aggregate YS plays no role and why YS always would be exactly equal to YD (that is essential for the goods market to be in equilibrium).
We can explain why YS = Y* by analysing what would have happened if firms didn't supply this quantity.
1. Imagine that firms supplied and also produced a larger quantity so that Y > Y*.
2. From the figure above, YD< Y and firms can't sell everything they produce.
3. Unplanned stock investments will increase by Y - YD when companies are forced to put unsold products in stock.
4. Then firms will want to lower their supply. Reduction will continue until YS = Y*.
5. If, conversely they supply and produce too little, Y < Y* and then Yd> Y. Stocks will now be decreased and firms will want to increase the supply.
Please note that Keynesian model always presumes quantity adjustment to get back to equilibrium. There are no price adjustments in the Keynesian model.
Fiscal Policy An Increase in Government Spending: Figure 1 Let us examine how an increase in government spending affects the interest rate and the level of income.
Q. Describe about Monetary policy? By monetary policy we mean policy directed at controlling the money supply and interest rates. In most nations, central bank is responsible f
Consider a nation in which the volume of goods and services is growing by 5 percent per year. If a country's economic size is growing faster than the rest of the world, then
A financial manager wants to design an investment portfolio for a client. The client has $50,000 available to invest, and the planner has identified four investment options for the
The following information has been extracted from the recently published accounts of Noddy Plc: Balance sheet as at 31 st May
The marginal approach to profit maximization means that a firm should produce until a. marginal revenue equals zero b. marginal revenue equals marginal costs c. marginal cost becom
A monopolist faces the following demand function for its product: Q = 45 - 5P The fixed costs of the monopolist are $12 and the variable costs are $5 per unit. a) What are the pro
After an oil price shock was impacted upon the other five variables in the model, many interesting results were found. I have already demonstrated that oil Granger causes i
BOP on Capital Account: BOP on Capital Account shows only export and import of capital and the difference between the two represents a country's capital account balance. C
Q. Describe classical model of macroeconomics? Though we use the term ‘the classical model' as if there were just one classical model, this isn't quite true. For all the models
Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd