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You're standing at three light switches at the bottom of stairs to the attic. Each one corresponds to one of three lights in the attic, but you cannot see the lights from where you
Now, let's modify our model a bit. Let's add a fourth sector of spending so that Y = C + I + G + X n with X = X o and M = M = f (Y). Will this change, by itself, increase, decrea
PRINCIPLES OF AN OPTIMAL TAX SYSTEM When taxes are imposed certain conditions must be fulfilled. These conditions are known as Principles or canons of taxation. According to
Monetary policy The problems concerning the ability of monetary policy to influence the economy, as for instance the doubts about the ability of lower interest rates to st
REALISM OF PERFECT COMPETITION The assumptions of perfect competition are obviously at variance with the conditions which actually exist in real world markets. Some market
A chemical producer dumps toxic waste into a river. The waste decreases the population of fish, decreasing profits for the local fishing industry by $100,000 per year. The firm cou
Disadvantages of product differentiation a) Product differentiation generally reduces the degree of competition in the market. It does this in two ways: i.
PROBLEMS OF USING PER CAPITA INCOME TO COMPARE STANDARD OF LIVING OVER TIME 1) The composition of output may change. e.g. more defence-related goods may be produced and
APPROACHES TO MEASURING NATIONAL INCOME The compilation of national income statistics is a very laborious task. The total wealth of a nation has to be added up and there are
Theories associated with different market structures A firms profit maximising output decisions take into account the market structure under that they operate. There are 4 type
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