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Graph: Interest Rate versus Quantity of Money Explain why the Money Demand Curve is a downward sloping curve. Suppose the interest rate is at iA. Explain how firms and households attempt to satisfy their excess demand for money. What is the effect of their actions? Suppose the interest rate is at iB. Explain how firms and households attempt to dispose of their excess supply of money. What is the effect of their actions? Now suppose there is an increase in the transactions demand for money because of growth in real GDP. Beginning at i*, explain what happens in the money market. How is this shown in the diagram?
Some firms with monopoly power are more focused on market share, size and influence in the economy. This is particularly true if there is a tendency for ownership (stockholders) and control (managers) to be separated. These firms sometimes are willin..
Tax-policy model assumes no autonomous tax. Derive an IS curve equation for an economy where taxes T are described by T = t0 + t1y: t0 being the autonomous tax level.
Explain why you would expect to see active secondary markets where shippers trade capacity and why it is efficient to allow such markets.
Explain how would we measure the cost of the project to determine whether it is worth undertaking.
Describe some forms of private spending that represent consumption and some forms that represent investment. The national income accounts include tuition as a part of consumer spending. In your opinion, are the resources you devote to your education ..
In what specific ways does Becker's model of the allocation if time differ from the simple work-leisure choice model? Compare the functioning of the income and substitution effects in each of the two models. Do the two effects have the same impact up..
Indicate whether each of the following statements is true or false. Explain why. a. When the law of diminishing returns takes effect, a firm’s average product will start to decrease
Suppose that TFP and the population of an economy are constant over time and equal to 1. Assume that everyone works and the labor input just equals the population. Assume that the capital stock in 2014 is 1. What is the amount of saving (and, hence, ..
One of the walrassian assumptions of the competitive (Walrasian) mechanism is all agents are endowed with "perfect information". What does it mean and what are the distinguishing characteristics? What other assumptions of the competitive mechanism su..
How could a company go about meeting those needs and thus motivate you to work better and harder.
The vast majority of new products fail. Estimates of failure rates range from 60% to 90%. Why? Isn't it reasonable to assume that the people working for the major food companies know this and thus take steps to ensure their new products are successfu..
Suppose that a country's workers are universally protected by COLA's and an adverse SAS shock, occurs. After wage and price adjustments, ceteris paribus, we find
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