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Instructions For the following 10 questions, consider an economy which is initially in equilibrium without a tax, with P* of $90 and Q* of 10. Later, a tax is put on the market
Question: Table below shows the recent trends in terms of consumption. (a) (i) Explain what is meant by the term ‘marginal propensity to consume' (MPC) and the ‘averag
Aggregate demand and Say's Law Y D = Y S in the classical model (Say's law) Aggregate demand Y D is defined as quantity of nationally produced
BENEFITS OF GDP
Name the largest budget deficit country In 2009 Greece was eurozone country with largest budget deficit (about 16.0% of GDP), while Finland was the country with the smallest bu
Equilibrium in the money market In the IS-LM-model, we have equilibrium in the money market when MD(Y, R) = MS This is the equation
Factors Responsible for changes in Aggregate Supply We know that changes in input costs such as wages, oil and other input prices will cause changes in aggregate supply. Most
Explain the economy automatic stabiliser A budget deficit is shortfall between a government's tax revenue and its spending in a given year. If a government runs a budget defici
A firm with two factories, one in Michigan and one in Texas, has decided that it should produce a total of 500 units to maximize profit. The firm is currently producing 200 units i
use a numerical example to illustrate how credit multiplier works
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