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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.
how do i calculate how much the gorverment should spend if the MPC is 0.8 and 200million is requered to reach full employment ?
compare and contrast the monetarism economics and the keynesian economics
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Give detail explanation about the Inflation Price index is computed at a particular point in time, inflation over a time period, mainly one year Inflation may just as
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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
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