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Suppose that the marginal utility of good A is 4 times the marginal utility of good B, but the price of good A is only 2 times the price of good B. Is this point consumer equilibri
Q. Describe Keynesian cross model? Keynesian cross model is a simple version of what we call the 'complete Keynesian model' or simply the Keynesian model. Keynesian model has a
use a graph of the classical labour market to illustrate the effects of a real wage existing in the market that is lower thhan the equilibrium real wage
Q. Aggregate demand in the IS-LM model? Aggregate demand Aggregate demand depends on Y and R in the IS-LM model As investments depend on R
How can consumers become better educated about the products they are considering for purchase? To what extent do you personally go to acquire the best information available?
Augmented Saving An alternative way of determining equilibrium GDP is to find the level of income where the sum of desired injections equals the sum of desired leakages. Desi
how can a country maintain equilibrium GDP with foreign trade?
Aggregate supply Remember that labor demand provides us profit-maximizing quantity of L for a given real wage. If W/P is given (as it's in cross model), we can find profit-maxi
Define the Fisher equation Fisher equation is: Money supply (stock of money) x velocity of circulation of money = price level x total transactions in the economy or MV =
Whenever real GDP declines, nominal GDP must also decline
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