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Interest Rates (R) - I feel that it is important to include a variable which represents the monetary sector of the economy because those inflationary pressures which are expected to be present post oil price shock are likely to impose pressures onto the monetary demand in the economy. Therefore Interest Rates (R) will be incorporated into the VAR model. From this we cannot examine monetary policy, due to the features of the VAR model. However we are able to observe changes in the rate of interest following an oil price shock.The Interest Rates statistics are calculated as the mean average throughout each quarter.
Suppose that the desired capital stock is given as: K* = 0.3Y/i r Where Y = GDP, and i r is the real interest rate. Suppose further that Y = $5 trillion and that i r
how can a country maintain equilibrium GDP with foreign trade?
Consider the case of cleaning up chemical contamination at an industrial site. The marginal benefits of additional cleanup are decreasing as the amount of cleanup increases. Howeve
Balance of T rade A country's present account reflects a money drain when exports exceed imports. The net distinction in-between the dollar value of a world imports an
Use the model in the tax incidence application to determine the effect of a given change in the tax on widget, change in T, on the equilibrium quantity of widgets. How does your an
Lucas’ point of view, what are the limitations of the Keynesian model? What improvements does he suggest?
We will continue with the familiar demand curve homework the previous section Let the market demand for goods be with a linear curve: (p =A q D /10), where it is known
COMBINED ISLM MODEL
Consider two consumers, A and B. A and B both want perfect consumption smoothing (c = cf) and both have no current wealth. However, the two consumers have different income streams.
Q. Illustrate diffrent types of money? In most countries, one may identify two 'types of money': Bank deposits Currency and coins The total value of all th
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