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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?
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In the city of Gelato the market for ice cream is perfectly competitive. Aggregate demand for ice cream is: D(p) = 1200-25p where p is the price for one cone of ice cream. Al
The Money Multiplier is explained below: If you see carefully, the money multiplier is nothing but an inverse of a reserve ratio. Therefore, we can write MM = 1/rr, where rr is
1. Why does inflation make nominal GDP a poor measure of the increase in total production from one to the next? How does the U.S' BEA deal with the problem inflation causes w
Illustrate the content in the rational consumer? Content in the rational consumer: a. How to spend income onto goods and services? b. Why maximizing usefulness? c. Wh
Determinants of Social Demand for Education Certain levels of education like the secondary school and graduate level are considered as having productive value and are attribut
cars:0,2,4,6,8 tow truck:30,27,21,12,0
Assume there is a remote area in china with high population.The area is composed exclusively of apartments and is populated by low-income residents .The people tend to stay in that
Production Function for Wheat * Farmers should choose between a capital intensive or labor intensive technique of production. Isoquant Describing Production of Wheat
What is the difference between 'Capital' and 'Capital value'? "The total amount of money or other resources owned or used to obtain future income or benefits." On the other h
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