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Q. Investment demand of the AS-AD model?
Investment demand. As long as we keep nominal interest rate (and thus real interest rates) constant, there is no reason for demand for real investment to change. We will expect nominal investments to increase by the same percentage as price level.
Government consumption. G is an exogenous real variable and we expect no dependence on P by same argument as for private consumption.
Q. How commercial banks create money? Commercial banks clearly can't influence the amount of currency in economy or monetary base because they aren't allowed to print money. Th
An electrical company audit indicates that motor consumption is 4x106 kWh per year. By upgrading to high efficiency motors a 10% savings can be made. The additional cost for the mo
The rest of the world in the cross model Imports Im(Y) depends positively on Y in the cross model In the classical model, imports doesn't depen
what is the meaning of the credit multiplier in the monetary sector
Calculating interest rates on a yearly basis If maturity is different from one year, interest rate is generally recalculated to a corresponding one year rate. For instance con
You are an assistant to a senator who chairs an ad hoc committee on reforming taxes on telecommunication services. Based on your research, AT&T has spent over $15 million on relate
The monetary system in any economy facilitates trade and allows people to trade more efficiently, as compared to a barter economy. In the United States, the monetary authority is t
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Changes in Money Market Equilibrium A shift in either the supply curve for money or the demand curve for money will alter the equilibrium position in the money market (and the
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