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Adding the economic activities of government to the circular flow model shows that: 1. Government spending creates inflation 2. Government purchases of goods and services,
Critique on Earmarking Studying the working of earmarking in many OECD (organisation of economic cooperation and development) countries, Potter and Diamond (1999) pointed out
Shor tage A condition under that the quantity demanded for a good or service exceeds the available supply for that good or service. Shortages usually cause a rise in price
The process of production needs several inputs. These inputs are known as the factors of production. In most cases, firms own some of the factors of production while some have to b
What are the properties of cost function? Properties of Cost Functions: Some similarities are here with consumer theory. Such similarities are actually exact while one compa
What are the Policies and Long-Run Growth In many concerns it is decidedly odd that world distribution of output per worker is as unequal as it is. Migration, World trade and f
A film studio in Hollywood produces movies according to the function q = F(K;L) = (2=100)K^0.5L^0.5 In the short run, capital (studios, gear) is xed at a level of 100. It costs $
What are the economic and social costs of high inflation levels? High inflation will have serious redistribution costs; make distortions to the economy; decrease international
RATIONAL EXPECTATIONS AND ECONOMIC THEORY : Much of undergraduate macroeconomic theory is discussed on the assumption that, in the short run, the expectations of economic age
1. Moving from an economically inefficient to efficient allocation of resources will necessarily increase benefits by more than costs. 2. There are two demand curves for a pri
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