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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.
complexity theory elements
what is credit multiplir and how does it work
Q. What is Labor Market? Labor market in the IS-LM model is the same as in cross model. Hence the IS-LM model is only applicable if profit-maximizing quantity of L would result
Provide an explanation of difference between opportunity and accounting cost, and accounting and economic profits. Then, please provide an example from your experience where opport
If taxes and government expenditures were constant and did not vary with income, then: A. passive deficits would increase. B. structural deficits would increase. C. passive deficit
outline two main restrictions by indian government applied to import. Using the data from your case study analyse and explain who would benefit directly and who would lose directly
what is difference b/w dynamic and static multiplier
Statics and Dynamics Economic models deal with stock and flow variables. These variables can be in one of the two states - equilibrium or disequilibrium - at a particular poin
Q. Describe Endogenous growth theory? Endogenous growth theory or new growth theory was developed in the 1980s by Paul Romer and others. In neo-classical model, technological p
A manager at a local bank analyzed the relationship between monthly salary and three independent variables: length of service (measured in months), gender (0 = female, 1 = male) an
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