How prices allocate resources
How prices allocate resources?
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A) The model of supply and demand is an influential tool for analyzing the market.
B) Supply and demand altogether finds out the price of the economy’s services and goods.
What are the main sources of supply of foreign currencies into domestic economy? Answer: A) Foreigners purchasing home country’s goods and services via exports. B) Foreign investment in home country via
Imports and American cars are much close however not perfect replacements. When the U.S. govt. tried to enhance American car sales by setting a price ceiling of P1 on imported cars: (i) The quantity of cars imported will drop/fall from Q0 to Q1. (ii)
Open-Economy Macroeconomics Suppose the structure of an economy with a flexible exchange rates is represented by: C = 200 + 0.85*(Y - T) &n
Assume that you consume bananas and apples, and the marginal utility of the last apple consumed is 6 times the marginal utility of last banana consumed. Though, the price of apples is only 3 times the price of bananas. This disequilibrium among the two goods can be re
What is the impact on income or output and price of excess demand (Inflationary gap)? Answer: In the condition of excess demand (that is Inflationary gap) there wil
What must be added to NNPMP to obtain net national disposable income? Answer: The Net current transfers from abroad must be added to NNPMP to get national disposabl
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Illustrate a point on consumption curve at which APC = 1. Answer: APC = C/Y = 1 is possible when C = Y, that is, Consumption is
If the liability to give a tax is on one person and the burden of tax fall on some other person, state the kind of tax? Answer: These are indirect taxes like sales
Multiplier: The Multiplier is the ratio of change in income by the change in investment. Multiplier (k) = ΔY/ΔI
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