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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.
1. Nations trade what they produce in excess of their own consumption to: A) generate jobs for the domestic economy. B) earn “good will” from the World Bank. C) prevent chronic sur
How can we determine fixed exchange rate If a nation has a fixed exchange rate (say against a specific currency), the government or central bank may change this fixed exchange
An electrical company audit indicates that motor consumption is 4x106 kWh per year. By upgrading to high efficiency motors a 10% savings can be made. The additional cost for the mo
Example of Introducing the Government- ACCOUNTING SYSTEM So far there was no government in any of our stylized economies. Let us now introduce it. To begin with, our governmen
Q. State the Marginal Productivity Theory. What are its features and assumption? Marginal Productivity Theory of distribution states that in a capitalist economy the demand for
Consider the following homogenous difference equation: xt=b0+b1xt-1 a) Iterate backwards xt can be written in terms of xt-2. b) Now show xt can be written in terms of xt-3 a
Explain the impact of Wal-Mart's supply chain management on its total product, marginal product, and average product curves. What has been the effect on its retail prices?
What is exchange.rate?
Q. Explain IS curve with inflation? The IS curve with inflation We can draw IS curve for a given value of π e . As earlier explained, IS curve isn't affected by changes
1 ) GDP Consumption 240 244 250
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