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The circular flow of income in an open economy An open economy is one in which international trade exists. Assume also that there is government spending and taxation. Thus
Explain the adjustment to the new equilibrium price from an increase in demand.
Define the monopoly of Central banks The central bank has a monopoly on issuing currency, it is in complete control of the monetary base. In section 7.4.2 we will describe exac
Consider the following utility function: U = X 1 X 2 Where X 1 and X 2 are quantities consumed of two goods. You are considering the actions of a consumer that maxi
Steps to real wage rates to fall Wage 'stickiness' or wage inflexibility may stop the real wage rate falling to the full-employment wage rate. Stickiness or inflexibility is ca
In the long run A. price and output levels are mutually dependent. B. the level of output depends on the price level. C. the level of output is independent of the price level.
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
The total value of loan in an economy is Rs. 400 million and the reserve ratio is 20 per cent. An enhance of Rs. 15 million in the money which the public keeps in commercial ba
1. Assume the required reserve-deposit ratio is 12%, and the currency-deposit ratio is 38%. How much would money supply change if the Fed made open market purchases of $100 millio
Collecteconomic data for three countries: Australia, China and Greece.The data is toobtainedfrom official sources as time series forthe key macroeconomic variables. These arereal G
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