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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 equal to nominal interest rate and we should use R = r + pe. Expected inflation pe is exogenous (even though not essentially constant. In more advanced Keynesian models you would find numerous assumptions on how expectations are formed.
Equilibrium Income The next step is to use the aggregate demand function, AD, to determine the equilibrium level of income and output. This is done in figure . Recall that the
1. Consider a natural monopoly. I. Show graphically and discuss how price and quantity are set by the natural monopolist. II. Define the areas corresponding to the consumers'
the circular flow of income in an governed economy
We define marginal product of labor, MP L as the derivative of f with respect to the L - which is, as (approximately) how much Y will increase when L increases by one unit. We als
COMBINED ISLM MODEL
America can produce 100 shirts or 20 computers and China can produce 100 shirts or 10 computers. With trade, who exports shirts? Which country benefits from the trade?
Institutional Setting for Trade Policy Formulation: While the Ministry of Commerce has the main responsibility of formulating India's trade policy, it also seeks policy inputs
Q. Show the advantage and disadvantage of money? Money has one significant advantage and one disadvantage compared to bonds: · Advantage: Money is more liquid than bond
Following on papers by Pacala and Socolow,1 The Carbon Mitigation Initiative at Princeton University, http://cmi.princeton.edu/ has summarized carbon stabilization strategies at
Q. Show the analysis of cross model? We can divide our analysis of cross model into three sections: Aggregate demand. Aggregate demand is a major component of cross mo
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