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How can we define the real wage as nominal wage We define real wage as nominal wage divided by a price index (typically CPI). In the illustration above, your real wage was 20 i
How can an economy achieve mutual gain from International Trade?
Suppose you are dealt two cards from a standard deck of playing cards. a) What is the probability of being dealt a pair of aces? b) There are 13 possible pairs possible (Aces throu
Axiom of completeness: Consumer's choice is complete. Implication: Since consumer is rational, she must have a unique preference relation. That means the consumer choice is ei
link of monetary account with other sectors and its meaning
Aggregate supply and the AS curve The AS curve is the aggregate supply as a function of P. It is horizontal when thesupply is low and upward sloping when the s
The Government, Rest of the World and the financial markets total expenditure of government can be divided into two parts: transfers to private sector and consumption.
a complete demend funtion equation
Granting a loan: When commercial banks lend, they create money. This can be explained by extending the hypothetical example of Bank
Neo-classical synthesis is a synthesis of classical model and Keynesian model. In brief, it states that Keynesian model is correct in the short run whereas the classical analysis i
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