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Assume that government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of real GDP demanded for each of the following values of the MPC. Then, calculate the change if the government, instead of reducing its purchases, increased autonomous net taxes by $10 billion. a. 0.9 b. 0.8 c. 0.75 d. 0.6.
What are the Central bank overnight interest rates The overnight interest rate is an important interest rate for a central bank and it has methods of influencing this rate. In
according to the Keynesian model, the short-run aggregate supply curve is horizontal when: A: there are unemployed resources and prices do not fall when aggregate demands falls. B:
Oil price shocks lead to large adverse supply shocks in the macroeconomy, infer Dornbusch et al (2008) who define an adverse supply shock as; ‘one that shifts the aggregate supply
give three example of models show endogenous and exogenous varibles
Explain about economic cycle The economic cycle is a period of approximately 6 or 7 years in which the economy completes a cycle of downturn, recovery, recession, and boom. A p
A passive deficit is the portion of the deficit that exists when: A. inflation is not fully anticipated. B. inflation is fully anticipated. C. the economy is at potential income. D
Calculating interest rates on a yearly basis If the maturity is different from one year, the interest rate is usually recalculated to a corresponding one year rate. For example
Company A owns a patent with 15 years of remaining life. Company B is paying royalties to Company A for a license to the patent. It is estimated that royalty payments (end-of- year
What is the emerging market economy According to Investopedia, Antoine W. Van Agtmael of International Finance Corporation of the World Bank first mentioned the term emerging m
Assume the marginal propensity to consume = .8, and government purchases increase by $.2 Trillion. 1. Potentially, how much will real GDP increase in the short-run after the inc
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