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Q. Describe the Keynes motivation?
Keynes' motivation: In good times, when Y is high (above its trend), national income is high (above it trend). Consumers will take this opportunity to buy things they otherwise can't afford. In bad times, conversely consumers simply can't buy things they would have bought if income was higher.
Q. What do you mean by Wage inflation? We will develop the Keynesian model removing the assumption of fixed nominal wages. We state wage inflation p w as the percentage averag
THE AD CURVE SHIFT TO THE LEFT WHEN
Equilibrium in Money Markets Having dealt with the forces that determine the supply of money and demand for money, let us combine supply of and demand for money to determine eq
Suppose that in the United States a car can be produced with 200 labor hours, while a ton of rice requires 20 labor hours. In Japan, it takes 150 labor hours to make a car and 50 l
REASONS TO NATIONALISE SARB
One problem in using exchange rate when comparing GDP per capital between countries is that is fluctuates a lot. A way of avoiding dependence on exchange rate is to use purchasing
Q. Explain money market and price changes? The money market and price changes The money demand curve will shift to the right (left) in themoney market diagr
Explaining balance of payments: First, with the second oil shock of 1979-80 and doubling of India's import bill along with dismal export performance as result of severe
constructing a opportunity set and budget line for $15 lottery ticket and intending on buying a candy bar for $0.75 and peanut bag for $1.50
Assume a sudden collapse in the stock exchange of an economy is expected to reduce the future profitability of the firms of the economy. Construct loanable funds market in a c
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