Economics Flashcards

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1
Q

What is Real Business Cycle Theory?

A

It derives from applying utility theory and budget constraints to macroeconomic models. It is associated with the New Classical School.

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2
Q

Central Banks are said to be independent if

A

Policy rate and method of computing inflation rate can be determined by them.

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3
Q

Central banks have credibility if

A

economic actors come to believe inflation rate will be near the central bank’s target and factor this inflation rate into their decisions.

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4
Q

(X-M)=

A

(S-I)-(G-T)

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5
Q

Increase in money supply causes

A

lower interest rate and increase in demand.

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6
Q

What is unemployment rate?

A

Unemployed/ labor force

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7
Q

How Weighted average number of shares can be determined?

A

By weighted average of shares. However splits are considered to be occurred at the beginning of the year.

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