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.
The usual household maximizes the utility by spending all its money to purchase and consume a combination of goods which yields: (1) Fundamental physiological requirements and customary wants. (2) Maximum status and the social prestige. (3) Complete satisfaction of al
What possible fiscal policy actions can be taken with respect to expenses and income to accurate excess demand and deficient demand in economy? Answer:
What points out revenue deficit? Answer: Revenue deficits are stated as the surplus of revenue receipts. Revenue Deficit = Revenue Expenditure - Revenue Recei
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
The hypothetical information in the following table shows what the economic situation will be in 2015 if the Fed does not use monetary policy: Year Potential GDP Real GDP Price Level 2014 $15.2 trillion $15.2 trillion 110.0 2015 $15.6 trillion $15.8 trillion
Question: Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have o
When cost of a foreign currency increases its supply too increases. Elucidate why?
Devaluation means decrease in the external value of a country’s currency as an aware policy measure adopted by the Government of a country. In another words, we make our currency less costly in terms of foreign currency. This builds our goods ch
Predictions which restricting international trade to protect specific industries and “infant” firms would (a) inefficiently decrease aggregate output and employment, (b) raise the market power of the protected firms and their workers, and
What is the difference among the discount rate, prime rate and the subprime rates of interest? Which interest rate in particular build the 2008 recession? Explain how that happened.
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