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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?
Sources of Economic growth: Human resources: Investment in human capital is considered as an important factor for economic growth. This is done by increasing the quality of
How to find quantity supplied given just the price
1. On Wednesday the 16 th , 2008 an enormous avalanche knocked out the lines that transmitted electricity from a hydroelectric dam to Juneau, Alaska. This eliminated Juneau's prima
Laspeyres index The Laspeyres index tells us that: - The amount of money at present year prices which an individual requires to purchase bundle of goods and services which w
What are the two main forms of economic distribution? What is the difference between them? The two major forms of economic distribution are exchange and transfer. Exchange in
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Dialectic Inquir y It is a technique for group decision making in which members are forced to "debate" both sides of a matter. Dialectic inquiry forces consideration o
Q. What is Formal Economy? Formal Economy:Sector of the economy that produces services and goods in return for monetary payment, and is fully integrated into the formal structu
Q. Explain about Demand - Constrained? Demand-Constrained: An economy is demand-constrained when level of output and employment is limited by the amount of overall demand (or s
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