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rational expectations schoolexpectations on the future values of economic variables play an important role in macroeconomic analysis and economic
another area where monetarists differ from keynesians is money supply and interest rates in the keynesian analysis with less than full employment
monetary policy vs fiscal policyaccording to monetarists money is very important in determining the level of aggregate demand and that monetary
monetarismthis school argues that disturbances within the monetary sector are the principal causes of instability in the economy according to
financial developmenta well developed financial system is very essential for the smooth functioning of any economy one set of important statistical
buying government securities when a commercial bank buys government bonds the effect is substantially the same as that of lending -
granting a loan when commercial banks lend they create money this can be explained by extending the hypothetical
functions of a commercial bank1 credit creationcreation of credit is a major function of a commercial bank when a bank creates credit or advances
commercial banks balance sheetthe accompaning table gives the balance sheet of a commercial bank in a simplified format the balance sheet contains
it is sometimes asked whether credit cards are money since many purchases are made using these credit cards are a means of obtaining credit and using
money is anything which is acceptable in settlement of a debt but paradoxically the main asset used to settle debts in modern economies is other
as people went from barter societies to more advanced economies money had to be invented several things successively served as money in the course of
as is the case with the supply and demand function for a single business firm determining the equilibrium price and output for its product the
factors responsible for changes in aggregate supplywe know that changes in input costs such as wages oil and other input prices will cause changes in
factors responsible for changes in aggregate demandthe aggregate demand curve shows an inverse relationship between the quantity of goods and
in the short run the discrepancy between actual and expected price level causes changes in output and employment but in the long run if all other
aggregate supply in the short runproduction takes place in business sector on the basis of an expected price for its output however costs are
aggregate supply aswe now shift our attention to the supply side of the macroeconomy aggregate supply explains the production and pricing side of the
the amount of wealth that households and business desire to hold in the form of money balances is called the demand for moneyindividuals and firms
functions of moneyduring the course of history money has taken various forms in fact there is no difficulty in identifying money but the problem is
the transmission mechanismthe mechanism by which the changes in monetary policy affect aggregate demand is called transmission mechanism two stages
the prices of fresh fruits have risen recently in the jackson area why would this have occurred
the multiplier analysis multiplier analysis explains what happens to circular flow of economic life when the behavior of one of the sectors or the
introducing the foreign trade sector most economies in the real world are open economies they engage in trade with other economies goods and
towards a national accounting system a real life modern economy is a very complex structure consisting of millions of units engaged in a