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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?
1- Suppose the economy is currently in recession, and the exchange rate if fixed using the IS-LM model. a) explain and illustrate the economy adjustment ( in the medium run)
what is the explanation about supply analysis?How to understand?
Elasticity of Demand Price elasticity of demand measures percentage change in quantity demanded which results from a 1 % change in price. Price Elasticity
1. How does the marginal social benefit curve of a common resource compare to the marginal social benefit curve of positive externality from a mixed good? Highlight the difference
1. Ayanna grows herbs. Last year she grew 2,000 pounds of herbs in a year while using 250 square feet of land and 1 worker. This year she doubled her land to 500 square feet, doubl
Slutsky Theorem - Mathematical Presentation: We already know from the first order conditions of utility Maximisation that, where D ij is the co-factor of the ith ro
Using commodities as an example, explain the factors influencing the PES for such goods. The basic determinants of PES are time span included and the availability of producer s
why is normal rate of return on capital included in the total cost and what implication does it have
Question 1: i) Elaborate on how CPI is used to calculate inflation and what are the limitations of such a measure? ii) Growth is always beneficial. Discuss iii) Explain
COST-OF-LIVING INDEXES * The CPI is computed each year as the ratio of cost of a typical group of consumer goods and services today in comparison to the cost during a base per
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