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Explain the link between the rate of interest and inflation.
Interest can be explained as the price of money - more expensive money will lead to few loans, higher saving and as lower investment and consumption. This will have a dampening effect on AD and therefore inflation.
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Suppose that the price of schooling is $20 per year of schooling and it suddenly rises to $40. Compute the point price elasticity of demand at the initial price level and at the fi
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