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Thinking about modifications in the model again: Go back to the original model again, but add a marginal propensity to invest, this is, suppose that I = f ( i and Y). The MPI is defined as ΔI/ΔY and has a positive value. Will this increase, decrease or not affect the value of the government expenditures multiplier? Describe!
Limitation The degree or success with which the central bank can use its bank rate policy to control the total credit in the economy depends upon the interest elasticity of in
An Economy consists of two regions, the North & the South. The short-run elasticity of labor demand in every region is -0.5. Labor supply is perfectly inelastic within both regions
Marginal utility approach The downward sloping nature of the demand curve can be explained by using the law of diminishing marginal utility . For instance, consider a consum
REMEDIES FOR UNEMPLOYMENT The measures appropriate as remedies for unemployment will clearly depend on the type and cause of unemployment. Broadly they can be divided into:
Equilibrium and Disequilibrium in the Balance of Payments If on the current account , the value of exports is equal to the value of imports, the balance of payments is said t
Demand Function for Money In the Keynesian analysis , the demand for money is a function of the level of income and the rate of interest. According to Milton Friedman, the dema
What is Demand theory: Demand theory relates to the study of consumer behaviour. It addresses questions like what incites a consumer to buy a particular product, why do consume
Buffer stocks and stabilization funds In this case the government buys up part of the supply when output is excessive, stores this surplus, and resells it to consumers in time
THE STRUCTURE OF POPULATION AND SUPPLY OF LABOUR The structure (also called age distribution or composition) of population, or the number of people in the different age groups
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