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Now we will analyse how macroeconomic variables fit together and present models which explain the main macroeconomic variables. Using these models we can, for instance, analyse
Suppose the Bank of Canada announces that it will raise the money supply in the future but does not change the money supply today. Using the Fisher equation, explain what happens t
In a large open economy, if the economy has a fiscal expansion, what would happen in the solow model?
How could utility theory help us understand the difference between a federal income tax and a federal sales tax on consumer consumption patterns?
What are the key components in the costs of health care services?
In the view of above complications, there is a long-standing debate on whether the fiscal policy should be active or passive in nature. Note that in the Keynesian context; even a p
Did monetary policy contribute to the economic crisis of 2008? Why or why not? How did monetary policy makers respond to the crisis? Has their response created an environment for f
The real interest rate Interest rates and inflation Suppose you have 1 million on 1st January 2008. A basket of goods and services similar to the CPI basket costs 100,000.
Instructions For the following 10 questions, consider an economy which is initially in equilibrium without a tax, with P* of $90 and Q* of 10. Later, a tax is put on the market
Researchers have put forth various theories to explain the observed widening of the income distribution in the United States over the past four decades. First, there has been a sh
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