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Give a brief description of the transmission mechanism
1. When the central bank target rate increases, other interest rates in the economy will increase (and the money supply will decrease, but that is not important here).
2. With higher interest rates, it is more expensive to borrow and more advantageous to save. Therefore, consumption and investment will decrease (we say that the central bank "cools off" the economy).
3. As consumption and investment fall, GDP is reduced and unemployment will rise. This will cause inflation and the growth rate in wages to fall.
Q. Explain AS-AD model and inflation? Even though AS-AD permits changes in the price level, it doesn't allow for persistent inflation or deflation. We can't have continued decr
Table Summary of results from the ADF test Test Number Oil GDP Interest rate Inflation Unemployment Exc
Kermit is considering purchasing a new computer system. The purchase price is $106,430. Kermit will borrow one-fourth of the purchase price from a bank at 10 percent per year compo
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Explain the term- inventory investment We would have a negative inventory investment whenever inventories decrease. By net investments we mean gross investments minus depreciat
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What are three modifications to a polymer that can make it transparent? How will these modifications affect the mechanical properties of the polymer?
1. An unemployed individual decides to spend the day fishing. The opportunity cost of fishing is equal to A) The cost of bait and any other monetary expenses. B) Zero, becaus
Recognize which of the following purchases is counted as a part of NI: a) Tata motors purchases tire from Good year to equip latest Indica. b) Tata motors purchases tires fr
Researchers have put forth various theories to explain the observed widening of the income distribution in the United States over the past four decades. First, there has been a sh
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