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Q. What do you mean by multiplier effect?
Loans and deposits in banks give rise to a significant multiplier effect. We use a simple instance to explain this effect. Consider the bank K-bank with total deposits of 10,000 (millions or whatever). K-bank is aiming for a reserve ratio of 10% of deposits. At the instance it has lent 9,000 and has 1,000 in reserve - exactly meeting their desired reserve ratio.
What is Cost-push inflation Cost-push inflation takes place when costs of production increase causing short-run aggregate supply curve to shift to left. The main causes of c
Which of the following statements is true? a. economic profit equals accounting profit minus implicit costs b. the short run is any period of time in which there is at least
tax be cut as the main policy target
George has been selling 5,000 T-shirts per month for $8.50. When he increased the price to $9.50 he sold only 4,000 T-shirts. What is the demand elasticity? If his marginal cost is
Why do financial crises occur and why are they so damaging to the economy?
In reference to the above question, assume you know the combination of inputs that minimizes cost. What would happen to this input combination if the price of labor increased? What
Some countries that supply oil to petrol manufacturers are located in or near the Middle East, others are not located in or near the Middle East. (i) Does the war benefit or har
Examine the efficiency of quanttitative credit control instrument
Due to the recent downturn in economic activity, Taz, has seen his hours at work reduced. He used to work 30 hours a week at $13 and hour, but now he works 22 hours. Due to this
Oil price shocks lead to large adverse supply shocks in the macroeconomy, infer Dornbusch et al (2008) who define an adverse supply shock as; ‘one that shifts the aggregate supply
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