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Under specified assumptions, derive the square-root formula of the Baumol-Tobin's inventory model of transactions demand for money and briefly describe the effect of a one period increase in the price level on the demand for money. How would your answer change if real transaction costs decrease simultaneously with the one-period increase in the price level? Explain carefully and illustrate your answers with a diagram.
The monetarists have demonstrated that the early Keynesians were wrong in saying that money doesn't matter at all to economic activity. Therefore, we should accept the monetarist position that money is all that matters". Do you agree? Why? Why not?
Dynamic Changes in Costs: The Learning Curve * The learning curve measures impact of worker's experience on costs of production. * It describes relationship between a firm
What is the theory of Second Best? Prove the theorem with the help of a diagram.
My current car gets 10 miles to the gallon and no resale value, but it will last 5 years for sure. I can always buy a new car for 8000 dollars that gets 20 miles to the gallon. A g
Suppose that the price of schooling is $20 per year of schooling and it suddenly rises to $40. Compute the point price elasticity of demand at the initial price level and at the fi
Suppose the demand curve for a consumer for coffee is: Q = 6 - 2P, where Q represents the number of cups per day and P is the price of coffee per cup. 1. Suppose the con
implications of market structures on price determination
Government Budget Deficits Governments have been traditionally spending more what they could earn by way of taxes and sale of economic goods and services produced by them. The
International Monetary Fund: International Monetary Fund (IMF) is one of the two institutions that were established as a result of the Brettonwoods Conference in 1944, the oth
A Competitive Short Run Supply Curve of Firm * Observations: - P = MR - MR = MC - P = MC * Supply is amount of output for every possible price. Thus: - If
about opean market economy
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