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In the long-run framework, budget surpluses: A. should be run on a permanent basis since they boost saving and investment and stimulate economic growth. B. should be run whenever output dips below potential output. C. should never be run since they crowd out investment in the short run. D. are better than budget deficits over the long run because unlike budget deficits, they increase saving and investment.
Balance of Payments All countries have economic transactions with other countries. These consist of import and export of goods and services, official and private gifts and don
Suppose home cost pricing prevails in international trade, while world output is declining. Consider two economies, A and B, both having floating exchange rates and the same moneta
When a government spends more than it receives in taxes; it runs a budget deficit, which is generally covered by issuing debt obligations to domestic and/or international investors
What is the use of long-run average total cost curve in the producing output? The long-run average total cost curve demonstrates the relationship in between output and average t
explanations to the short-run fluctuation and pilicy prescriptions of the schools macroeconomics thought
Consider the consumption decisions of R.B. Turbo, a new student at T University. Ms. Turbo has only available $1,000 in monthly income to spend on food and housing. In te
Overnight interest rate of Central banks When the central bank buys government securities, it purchases from many individuals, companies and institutions. Deposits and reserves
Functions of Money During the course of history money has taken various forms. In fact, there is no difficulty in identifying money but the problem is defining money. Economis
If the indifference curves are straight lines with slope s, and the budget constraint is given by: x*p1+y*p2 = m, then describe the optimal choice of the consumer.
Q. Explain Growth theory? The purpose of this topic is to try to explain growth in GDP. The models in this topic are very different from the rest of the models as they use only
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