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Q. Aggregate supply in AS-AD model?
In order to figure out all the variables in AS-AD model, we need one more equilibrium condition so that we can identify a unique point on AD curve as the unique equilibrium. This condition will come from production side and labor market.
Q. Determination of variables in AS-AD model? Once Y and P are determined, all other endogenous variables would be determined as well. Interest rate is determined by money mark
What are the instruments of monetary policies
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Government revenue, government spending and net exports G, NT and NX are exogenous variables in the classical model In the classical model (and
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Steps to real wage rates to fall Wage 'stickiness' or wage inflexibility may stop the real wage rate falling to the full-employment wage rate. Stickiness or inflexibility is ca
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