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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.
has determined that the price elasticity of demand for two customer segments (Coach and Business Class) is -1.35 and -2.50. Based on their expectations of profitability, Kashian r
The IS-curve in the AS-AD model The IS-curve is not affected by P in the AS-AD model We can define an IS-curve in the AS-AD model similarly to
In a particular month, the labor force is 130 million, there are 9.1 million unemployed workers, the job -losing rate is 3% per month, and the job-finding rate is 40% per month. Ho
1) Consumption is positively related to stock market wealth but negatively related to taxes and tax rates.
Sears rates its salespersons according to their sales ability and their potential for advancement. They sampled 500 salespeople with following data: Potential for Advancement Fair
explain the stages and various coordination mechanisms involved in policy processes.
Q. Define the Labor Market? A significant macroeconomic variable is the total amount of labor which is used in a certain time period. Amount of labor and amount of capital are
If the U.S. government were willing to convert dollars into gold at a fixed price, then dollars would be a. fiat money. b. commodity money. c. bank money. d. both fiat and
Explain about the economies and diseconomies of scale. Economies and Diseconomies of Scale: a. There are economies of scale while long-run average total cost refuses as outp
Once we have monthly data on a price index we can evaluate the inflation. In most nations, the percentage change in price index during one month is small. Hence it is more common t
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