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Why is it so difficult for government to achieve all macro objectives simultaneously?
Specifically showing possible trade-offs i.e.
a) Stimulatory policies which enhance AD might cause inflation
b) Growth might conflict with full employment as structural and technological change affects demand for certain labour groups (see sectoral/technological/regional unemployment), supply-side policies might increase efficiency and create redundancies amongst labour groups
c) Full employment might also create inflation
d) Growth might increase imports (HL: MPM, and lower multiplicative effects) and decrease exports due to inflation
e) Growth Æ inflation Æ depreciation of currency
f) Fiscal stimulus may involve deficit spending and debt, which in turn could have a negative effect on the exchange rat
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average-marginal relationship
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Evaluate the equilibrium price and quantity (a) Find the equilibrium price and quantity (b) If government in trying to control the price of the good fixes the price at c550
a. Determine Australia’s market equilibrium for TV sets. i. (1) What are the equilibrium price and quantity?
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