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The Pigou effect: A) suggests that as prices fall and real money balances rise, consumers should feel less wealthy and spend less. B) suggests that as prices fall and real mo
Define demand-side growth First, demand-side growth is caused by a change in one of the components of aggregate demand. If any of the components enhances (investment, consump
How central banks increase the monetary base When the Central Bank cuts the target rate, they must simultaneously increase the monetary base by buying government securities. The
Q. Discuss about the factors affecting the Price Elasticity of Demand. a. Availability of Substitute- Availability of close substitute is important determinants of elasticity of
the difference between the AC and the AVC curve
An economy's IS and LM curves are given by the following equations: with Y indicating output (income), c indicating the marginal propensity to consume, I investment, G gove
Give example of commercial banks how they create money For example, the borrower uses the money to buy an apartment, the funds are transferred to the seller of the apartment. T
Aggregate Supply in the Short Run Production takes place in business sector on the basis of an expected price for its output. However, costs are incurred in anticipation of sa
Why is private property, and theand the protection of property rights , so critical to the success of the market system ? How do property rights encourage cooperation?
Explain how inflation unemployment trade-off is not feasible under adaptive expectation.MEC002
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