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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.
Suppose that the economy is characterized by the following behavioral equations: C= 170 + 0.7YD I= 170 G= 150 T= 100 a. What does equilibrium output equal? Y=? b. What d
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
Can the federal government go bankrupt? Explain.
Q. Show the equations of the AS-AD model? The equations of the AS-AD model To précis the AS-AD model, we can have a glance at its equations. IS-LM model was "solved" by s
Which of the following statements BEST describes the Metzler paradox? a. Tariffs improve the imposing nation's terms of trade. b. Export subsidies hinder the imposing nation's term
Explain about the circular-flow of economic activities. Circular-Flow of Economic Activities: Economic Agents: a. Households b. Firms Where they interact:
Singer suggests that although the right to sell blood does not threaten the formal right to give blood, it is incompatible with "the right to give blood, which cannot be bought, wh
what is the role of advertising in baumol''s model?
Let us now see a bit more closely how monetary policy works. See Figure Figure The initial equilibrium at point E is on the initial LM schedule that corresponds to a
There are many other macroeconomic indicators which one might expect to be affected following an oil price hike. Perhaps more obviously affected than GNP is inflation. DePratto et
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