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Problem: Long-Run Labor Demand and Factor Substitutability Suppose there are two inputs in the production function, labor (L) and capital (K), which can be combined to produce
Let Consider an economy with three states. The following set of stocks is traded: x 1 =(2,2,0) x 2 =(1,0,3) x 3 =(0,2,4). The t=0 prices of these stocks are give
Neoclassical Theory The neoclassical theory of economic growth began its career in the fifties and since the mid fifties a sizeable literature has developed. The theory largely
WHY MANAGERS NEED TO KNOW ECONOMICS The influence of economics towards the performance of managerial duties and responsibilities is of major importance. The importance and cont
Lender of Last Resort The central bank also acts as the lender of last resort. Historically, this function developed out of the special position of the central banks. The centr
NON-ACCELERATING INFLATION RATE OF UNEMPLOYMENT During 1970s economists encountered a puzzle in the sense that inflation and unemployment data did not fit into the Phi
what is segmentation
Features of Monoploy in Monopolistic Competition Monopolistic competition has the following features from monopoly : As the products are differentiated substitutes, each b
Stable and Unstable Equilibrium An equilibrium is said to be stable equilibrium when economic forces tend to push the market towards it. In other words, any divergence from t
Supplementary Reserve, Requirements/Special Deposit If the Central Bank feels that there is too much money in circulation, it can in addition require commercial banks to mainta
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