Concept of deflationary gap
Elucidate the concept of deflationary gap. Answer: Deflationary gap is the deficit in aggregate demand from the level needed to maintain full employment equilibrium.
Elucidate the concept of deflationary gap.
Answer: Deflationary gap is the deficit in aggregate demand from the level needed to maintain full employment equilibrium.
How prices allocate resources?
Illustrate a point on consumption curve at which APC = 1. Answer: APC = C/Y = 1 is possible when C = Y, that is, Consumption is
What occurs to economy, when credit availability is limited and credit is made costlier? Answer: Aggregate demands falls
The consumer reaches equilibrium for any two goods X and Y whenever the: (1) MUx/Px = MUy/Py. (2) MUx/MUy = Py/Px. (3) Utility from X equivalents the utility produced by Y. (4) Point of diminishing returns is arrived at. Can someon
Since the percentage of income paid in taxes generally declines as taxpayer income increases, standard sales taxes and “sin” taxes [for example, excise taxes upon liquor or tobacco] are illustrations of: (1) proportional t
Explain the main features of Harrod - Domar Growth model. How does the Harrod Domar model explain the occurrence of trade cycles?
When in an economy intended investment is more than intended savings, then what is the consequence of it on the national income? Answer: When I > S, the level of
Whenever longer periods are considered and hence bigger ranges of adjustments (that is, substitutions) become probable, demand curves tend to become: (i) Flatter, and therefore do supply curves. (ii) Flatter, as supply curves become steeper. (iii) Ste
Tariffs: -are also called import quotas. -may be imposed either to raise revenue (revenue tariffs) or to shield domestic producers from foreign competition (protective tariffs). -are per unit subsidies designed to promote exports. -are excise taxes on goods exported abroad.
Describe Aggregate Expenditure model and also state AD/AS model?
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