Investment in a circular flow
Question: Why does investment spending not equal saving in the circular flow?
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Imagine a standard aggregate demand and aggregate supply set-up. As you know, the British government has been reducing government expenditures to reduce fiscal deficit and government debt.
Imagine the market for tablets (e.g. iPads), with downward sloping demand curve and upward sloping supply curve.
Suppose MPC is 0.8 initially. Households then change their behavior so that the MPC falls to 0.75. What happens to aggregate expenditures? Why?
Q1. Using the above data, determine GDP by both the expenditures and the incomes. Then determine NDP. Q2. Now determine NI in two ways: first, by making the required additions or subtractions from NDP; and second, by adding up the types of incomes
If you can enter only one market, and the cost of entering market (regardless of which market you select) is $250,000, should you enter one of the European markets? If so, which one? If you enter, what is your expected profit?
Discuss the current economic situation in the U.S. as compared to five (5) years ago. Include interest rates, inflation, and unemployment rate in your explanation.
What are the determinants of supply? How is the supply curve impacted by changes in determinants? What is the difference between a change in supply and a change in the quantity supplied and what are the causes of each?
"If the amount of product differentiation in a monopolistically competitive industry is very small, the outcome in that market will not be very different than if it were a perfectly competitive industry." Explain
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