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State the Monetary base and the supply of money - central bank
It is not possible for the central bank to print and distribute money - that would increase their debt without increasing their assets. Instead, they change the monetary base by buying and selling financial assets (usually government bonds) in so-called open market operations.
Let us say that the central bank buys government securities for 100 million. They can pay for these bonds simply by printing new bills to the amount of 100 million. At first this may seem suspicious and "too simple". But remember that outstanding notes count as a liability for the central bank. When it buys the government securities, its assets will increase by exactly the same amount as its liabilities.
Assume that an economy's GDP Y=5000. Also assume that the government runs a deficit where tax revenue T=1000 and government expendituresG= 1500. The consumption function is represe
Q. What is IS-LM model with inflation? The IS-LM model with inflation The basic assumption We developed IS-LM model with constant wages and prices. We can now exten
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The United States is considered to be an industrialized nation because we have such a high standard of living. Countries with lower standards of living are considered to be emergin
As is the case with the supply and demand function for a single business firm determining the equilibrium price and output for its product, the aggregate supply and aggregate deman
THE GOALS OF MACROECONOMIC POLICY Economic analysis attempts to explain why problems arise in the economy and how these problems can be dealt with. It is, therefore, indispens
A few years ago, the Federal Communications Commission (FCC) eliminated a rule that required Baby Bells to provide rivals access and discounted rates to current broadband facilitie
The Stop decay company sells an electric toothbrush for $25. Its sales have averaged 8,000 units per month over the past year. Recently, its closest competitor, Decay fighter, redu
Determine the Economic functions of money There are three functions of economics of money - A medium of exchange. - A unit of account - Store of value.
1. You are managing a breakfast and lunch only restaurant that sells all-inclusive plated meals (i.e. all lunches include any protein or hot foods as well as salads and sides on a
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