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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.
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Gross domestic product Definition Perhaps the most significant concept in macroeconomics is Gross Domestic Product (GDP): Gross Domestic Product (GDP) is defined as the
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The resource based model identifies four criteria that firms can use to evaluate whether particular resources and capabilities are core competencies and can therefore, provide a ba
Including different interest rates with different maturities would complicate the models however it wouldn't buy you very much. Because interest rates with different maturities are
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#question.Q8. In 1961, Germany faced the dilemma of an external surplus and a booming economy. As a result, speculative capital flowed into Germany and the Germans felt obliged to
(a) Use this information to set up a diagram showing the firm''s total revenue and total cost schedules. In this diagram, show the points at which the firm is maximizing profits.
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