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The managers of Firm A recommend that Firm A purchase Firm B because the purchase will diversify the business of Firm A. Diversification of risks is a desirable strategy for individual shareholders, but if shareholders can diversify their risk by holding stock in Firm B, is there any reason for Firm A to purchase Firm B? Suppose labor turnover is costly, could that provide an efficiency saving to support the proposed purchased? (Hint: If output is less variable, labor employment can be steadier.)
As people went from barter societies to more advanced economies, money had to be invented. Several things successively served as money in the course of economic evolution. Arrowhea
Q. Describe Wages and income? Remember that by wage we characteristically mean what you receive for working one hour, whereas income is the total revenue from all sources over
what is real and norminal interest rates?
Consider the following homogenous difference equation: xt=b0+b1xt-1 a) Iterate backwards xt can be written in terms of xt-2. b) Now show xt can be written in terms of xt-3 a
THE MODEL BUILDING A model of individual or aggregate economic phenomena represents a simplification of real world economic complexities. It may be expressed in words, ta
Example of Fixed Investment-ACCOUNTING SYSTEM Consider again the economy in example III. An inventor offers to construct some machines for each of the three companies which wo
If the price of a good rises, what are people likely to do? a Substitute a less expensive good b Buy more of the good c Buy more of all goods because of added buying power d All of
long run supply curve
which turning point marks the end of an economic prosperity and the start pf contraction
Reaganomics Supply-side economics or New Classical Economics has gained distinct prominence in the early 1980s with the election in the U.S.A of a conservative government unde
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