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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?
Explain how the price system eliminates a surplus. The meaning of surplus is that quantity demanded is less as compared to the quantity supplied. This will lead to downward pr
Evaluation of the WTO: The WTO is different from and an improvement over the GATT in the following respects: • The WTO is more global in its membership. • The WTO ha
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
causes of market failure and its solutions?
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At a market price of $21 a toy, what quantity does the firm produce in the short run and does the firm make a positive economic profit, a zero economic profit, or an economic loss?
Problem: (a) Distinguish between fiscal and monetary policy, giving examples where appropriate. (b) Explain how fiscal and monetary policies might be used by a government
Question 1: (a) Clearly illustrate the features of a perfectly competitive firm. (b) How would the same industry change if it were organized first as a competitive industr
Q. What do you meant by Payroll Tax? Payroll Tax:A tax which is levied on current employment or payrolls (collected either as a fixed amount per employee or as a percentage of
Why is it so difficult for government to achieve all macro objectives simultaneously? Specifically showing possible trade-offs i.e. a) Stimulatory policies which enhance AD
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