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Real Exchange Rates (EXCH) is the next variable that will be analysed in this VAR. The reason for including exchange rates in the VAR is that they are an important channel through which the price of oil may impact upon economic activity.Another reason is that the UK exports crude oil worldwide therefore it may be possible to analyse the effects on domestic exchange rates should there be a change in the price of oil. The real exchange rate data uses Jan 2005 = 100 as the base.
factor for long run trend of term of trade
Marginal propensity to SPEND refers to: a. a nation's additional spending on a good per an additional unit of expenditure. b. a nation's additional consumption based on a unit incr
If a government finances an increase in its expenditures by selling bonds to the public, then the aggregate demand curve will: A. not shift. B. shift out more if crowding out occur
In order to observe the correlations between each variable, the most effective method to use is Vector Autoregression (VAR). VAR estimation uses a system of simultaneous equations
The managers of Firm A recommend that Firm A purchase Firm B because the purchase will diversify the business of Firm A. Diversification of risks is a desirable strategy for indivi
what is the meaning of the credit multiplier in the monetary sector
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
effects of real wage existing in the market that is lower than the equlibrium real wage.what will happen in this labour market if it is perfectly competitive
This economics of scale exist for all of the following reasons except: a. bureaucratic inefficiencies b. management problems c. failures in information flows d. firm size is to
Q. Explain about Monetary base? Monetary base is defined as the total value of all currency (coins andbanknotes) outside the central bank and commercial banks' (net) reserves w
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