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Marginal Propensity to save (MPS) is the ratio of change in total saving to change in total disposable income.Symbolically,
MPS = ?S/?Y
For example, total saving in an economy increase from $ 2,000 crore to $ 5,000 crore, and total disposable income rises from $ 10,000 crore to $ 20,000 crore. Then, the MPS will be calculated as follows:
what do we mean when we say export are exogenous and import are endogeneos?
Q. Nominal interest rate and expected inflation? When we have inflation, we can't, of course, presume that expected inflation is zero. So real interest rate will no longer be e
Desired Aggregate Spending Desired aggregate spending refers to the volume of purchases of the currently produced goods and services that all spending units in the economy wish
Q. What do you mean by Gross domestic product? Perhaps the most significant concept in macroeconomics is Gross Domestic Product (GDP): Gross Domestic Product (
Derive the following equilibrium for the IS-LM model:
A bakery has fixed costs of $10 per day and variable costs of $1 per loaf. Its oven can handle up to 50 loaves a day and it is impossible to obtain additional capacity. Sketch the
The Widget Manufacturing Company must replace a widget machine, and is evaluating the capabilities of two systems. A requirement of management is that the machine chosen must be p
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
Q. Explain AS-AD model and inflation? Even though AS-AD permits changes in the price level, it doesn't allow for persistent inflation or deflation. We can't have continued decr
Q. Relationship between L and P? • As long as L is smaller than LB, L may change with no change in prices. In this range, there is no relation between L andP. • When L is betw
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