PQTopicI - for individual economic decisions? (e.g. is a...

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Practice Questions: Set 1. The Real Economy Lecture Date: Jan. 3 rd i) Explain why there is no role for money in the Edgeworth box model. What does this tell us about the role of money in actual economies? ii) Explain why there is no role for financial institutions (like banks) in the Edgeworth box model. What does this tell us about the role of these institutions in actual economies? iii) Explain why a simple model of supply and demand is not appropriate for studying the role of money in an economy. iv) What are “gains from trade?” What does the existence of gains from trade imply
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Unformatted text preview: for individual economic decisions? (e.g. is a strategy of self sufficiency, where I try to produce goods for my own consumption, optimal?) v) Discuss the relationship between the existence of gains from trade and the role of money? vi) What are trading frictions? Are there any trading frictions in standard microeconomic models (like the Edgeworth box ). vii) Discuss the relationship between trading frictions and the role of money?...
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This note was uploaded on 01/26/2012 for the course ECON 401 taught by Professor Burbidge,john during the Fall '08 term at Waterloo.

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