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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.
Interest rate determination The real interest rate r will be equal to the equilibrium real interest rate In the classical model we define equil
Rewrite the national-income model (3.23) in the format of (4.1), with Y as the first vari¬able. Write out the coefficient matrix and the constant vector.
Example of Indirect Taxes and Subsidies- ACCOUNTING SYSTEM We now permit our government to impose what are called indirect taxes. This category includes sales tax, excise tax,
Question 1: Consider a closed economy with no government sector in which consumption (C) is related to income (Y) by the equation: C = A + bY (a) What is the marginal pr
Explain clearly the liquidity preference theory of interest propounded by j.m.keynes
What is the difference between money multiplier and credit multiplier
Find the annual (yearly) real and nominal GDP numbers for Turkey from TCMB for the recent past. Use the EVDS system and TUIK data. Describe the source and definition of the data us
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
Suppose that the quantity theory of money holds & the velocity of money are constant at 5. Output is fixed at its full employment value of 10,000 & the price level is 2. a) Ver
There are a lot of mosquitoes in the island of Liholiho. Only two people live in this island, Robinson Crusoe and Man Friday. Their respective demand curves for mosquito control ar
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