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Q. Consumption function in the IS-LM model? The consumption function will be the same as in cross model, consumption will depend positively on Y. In the classical model, consum
Q. Construction of real gross domestic product ? To be able to make reasonable comparisons of GDP over time, we should adjust for inflation. For instance, if prices are doubled
P and Y are both endogenous variables and according to the quantity theory of money we need P.Y = constant. If we divide both sides by P we get Y = constant / P. Because Y = Y D i
Q. Explain money market with inflation? The money market with inflation Let's begin with the money market diagram and introduce inflation. As M D relies positively on P
Which of the following is a result of an export subsidy? a. The imposing nation always benefits from an export subsidy. b. The imposing nation suffers a terms of trade loss from an
Give a brief description of the transmission mechanism 1. When the central bank target rate increases, other interest rates in the economy will increase (and the money supply
Explain how changes in the quality of health care will influence the demand for care.
Q. Relation between nominal and real interest rate? Relation between nominal interest rate, real interest rate and inflation If we signify the nominal interest rate by R
casual factors of the traditional business cycle and its effect on sectors of the economy?
Suppose a firm raises $23 million dollars by issuing debt at a cost of 6.1%, raises $14 million by issuing common stock at a cost of 8.6% and raises an additional $10 million by is
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