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Overnight target rates and inflation One of the major targets of every central bank is a low and stable inflation. Its main control variable is the overnight interest rate tar
Financing of the external payments deficit: The trend in India's widening CAD during the second half of the eighties, both in absolute terms and also as a proportion of the
Q. What is Inflation? Inflation between two points in time is defined as percentage increase of price index between these two points in time. Comments: Price inde
Q. Show factors that govern the Price Elasticity of Demand? a. The number and closeness of the substitutes- The more and the better the substitutes, the grater is the Price Ela
Those economists who believe that monetary policy is more potent than fiscal policy argue that the: A) Responsiveness of money demand to the interest rate is large. B) Responsive
difference between mercantilism and absolute advantage
Government and Price-Determination can be understood as follows: The government might intervene in the market and mandate the maximum price (price ceiling) or the minimum price
Separation of growth and fluctuation It is very useful to separate the evolution of a variable which grows over time into a trend and fluctuations around the trend. The graphs
The AS-AD model with inflation When we remove assumption of constant prices to allow varying real wages. Resulting model was known as AS-AD model. Similarly we now remove the a
what is the importance of the quantity theory of money
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