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Differentiate between Actual and Potential output.
Actual output is that level which economy in fact produces. In contrast, potential output is the aggregate capacity output of a nation; the maximum amount of goods and services that can be produced with available resources and a given state of technology.
) Consider an economy where individuals live for 2 periods and have prefer- ences represented by ln(c) + ß ln(c') where c and c' represent consumption in the first and second perio
example on the calculation of IS LM Curve?
compute: credit multiplier, maximum change in the money supply
Monetarism This school argues that disturbances within the monetary sector are the principal causes of instability in the economy. According to monetarists, the money supply i
with help of is-lm technique explain the process of integration of money market and goods market by way of keynesian approach
1. Nations trade what they produce in excess of their own consumption to: A) generate jobs for the domestic economy. B) earn “good will” from the World Bank. C) prevent chronic sur
Goods in the circular flow If Y R is total value of all goods going from F R to F H , then total value added from all firms in the F R box is equal to Y R (they don't pu
Suppose that the desired capital stock is given as: K* = 0.3Y/i r Where Y = GDP, and i r is the real interest rate. Suppose further that Y = $5 trillion and that i r
The Stop decay company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decay fighter, redu
What causes economic growth? Causes of economic growth: Into the Solow model, economic growth is based onto the quantity and quality of technology and resources. Growth
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