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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 is the arc cross elasticity of demand between Stop decay''s toothbrush and Decay fighter''s toothbrush? What does this indicate about the relationship between the two products
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a. The diagram above depicts the current position of a hypothetical economy using the Keynesian Income/Expenditure approach. If national income is currently at Y1 explain why this
Money facilitates market activities and is essential in complex market systems. With money people can avoid the problems associated with coincidence of wants. Between, these pro
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Economists view depreciation as capital consumption for them, there are two distinct ways of charging for depreciation (1) the depreciation of equipment must equal its opportunity
Define Disposable Incomeand dumping Disposable Income : The amount of income left after as deductions as income tax, pension contributions and national insurance. More genera
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