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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?
What actions could a government take in order to keep the price above market equilibrium? There are four basic possibilities here; 1) Minimum price; 2) A tax on the good
Suppose scientists discover that eating soybeans prevents cancer and heart disease. What effect would you predict on the price of soybeans?
Shifting the PPF Curve To raise the manufacturing of one good without reducing the production of the other, the PPF curve should shift outward. The PPF curve shifts outward as
Air is one of the important constituent in the environment that is prone to pollution. Pollution of air refers to that part of atmosphere which is very nearest to the earth’s surf
Consider an economy with high innovative potential, but where saving is insufficient to fund innovative investments. Use Garrison's capital-based macroeconomics to explain how more
Suppose that two wage regressions are estimated for native and white workers: Wn = 5.0 + 0.10S Ww = 6.0 + 0.14S Pick a reasonable average level of schooling for white and Native wo
Define Nash equilibrium and explain with the help of the game ''prisoner''s dilemma''.
Xd(Px)=5000-100Px
1. Consider a world with two assets: a riskless asset paying a zero interest rate, and a risky asset whose return r can take values +10% or –8% with equal probability. An individua
National income accounting: Final Goods: Final goods are goods and services which are being purchased for final use and not for resale or further processing or manufacturing
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