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(a) Suppose you are appointed to the position of key advisor for the central bank in China. Explain to the bank how its monetary policy
(a) Suppose you are appointed to the position of key advisor for the central bank in China. Explain to the bank how its monetary policy may affect a dollar's purchasing power of goods and services in the country. Diagram(s) required.
(b) Suppose an economy has an excess supply of workers. Should firms reduce or increase the wage? Explain this with the standard economic theory and the efficiency-wage theory.
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