Question

First consider the United States as a closed economy—that is, assume that there are no imports...

First consider the United States as a closed economy—that is, assume that there are no imports or exports. In the short run, what is the impact of the increased saving behavior on GDP, consumption, and investment? Explain. (Hint: Use the IS-LM framework here)

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Consider a closed-economy IS-LM model. Assume initially the economy is at medium run equilibrium. Discuss with...
Consider a closed-economy IS-LM model. Assume initially the economy is at medium run equilibrium. Discuss with the help of graphs the effects of a decrease in consumer sentiment for output, interest rates and price level in the short run as well as in the medium run. Be sure to explain how the economy transitions from short run to the medium run.
Consider the closed-economy model.Suppose the economy is then hit by an adverse supply shock, which causes...
Consider the closed-economy model.Suppose the economy is then hit by an adverse supply shock, which causes P1 to jump up to P2 > P1. Using Keynesian cross and money market diagrams, explain what will happen to the IS and LM curves in the short run as a result of this shock.  Use IS-LM and AD-AS diagrams to show what happens to the economy in the short-run, long-run, and during the transition, following the supply shock.
The data in the first two columns below are for a private closed economy. Use this...
The data in the first two columns below are for a private closed economy. Use this table to answer the following questions. Real GDP = DI (billions) Aggregate expenditures (billions) Exports (billions) Imports (billions) Net exports (billions) Aggregate expenditures (billions) $ 80 $100 $15 $5 $_____ $_____ 120 130 15 5 _____ _____ 160 160 15 5 _____ _____ 200 190 15 5 _____ _____ 240 220 15 5 _____ _____ 280 250 15 5 _____ _____ 320 280 15...
Consider the closed-economy model. (a) Suppose the economy is initially in long-run equilibrium with Y =...
Consider the closed-economy model. (a) Suppose the economy is initially in long-run equilibrium with Y = Y¯ , r = ¯r, and P = P1. Draw IS-LM and AD-AS diagrams showing this equilibrium. (b) Suppose the economy is then hit by an adverse supply shock, which causes P1 to jump up to P2 > P1. Using Keynesian cross and money market diagrams, explain what will happen to the IS and LM curves in the short run as a result of...
Assume that the economy of Fruitland is a long-run equilibrium with full employment. In the short...
Assume that the economy of Fruitland is a long-run equilibrium with full employment. In the short run, nominal wages are fixed. (a) Assume that there is an increase in exports from Fruitland. Explain the effect of higher exports on the following in the short run:             (i) Real GDP (ii) Price Level (b) Based on your answer in part (a), what is the impact of higher exports on real wages in the short run? Explain.       (c) As a result of...
MPC=0.6 This is a closed economy. Wages are unable to adjust in the short run. At...
MPC=0.6 This is a closed economy. Wages are unable to adjust in the short run. At first, the economy equilibrium is at Y=Original, and P=Pe (the expected price level when managers signed contracts for nominal wages. This is a horizontal short-run aggregate supply curve. Consider this: The government increased spending (G) by 215. A) How will Investment (I) change in the short-run? B) How will Consumption (C) change in the short-run? C) How will Output (Y) change in the short-run?...
Saving and net flows of capital and goods In a closed economy, saving and investment must...
Saving and net flows of capital and goods In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in...
3.Canada is a small open economy, and our (by far) largest trading partner is the United...
3.Canada is a small open economy, and our (by far) largest trading partner is the United States. Imagine that the US economy enters a significant recession due to COVID-19, but the Canadians do not get sick at all and everything works as usual in the Canadian economy. How would the US recession show in the Canadian economy? Use the IS-LM-FE model to explain what would happen to the Canadian real GDP and real interest rate and why. Discuss the effects...
Suppose that in a closed economy the fiscal policy is contractionary and monetary policy is expansionary,...
Suppose that in a closed economy the fiscal policy is contractionary and monetary policy is expansionary, and the central bank is setting the interest rates (LM is horizontal). Graphically analyze this policy mix by using IS-LM diagram. What will be the impact on real income and on interest rate in the short run? What will be the impact of this policy mix on the economy in the medium run? Show by using an AD-AS-LRAS diagram.
Consider the following data of the country ABC (ABC) economy in 2019: million ($) Private consumption...
Consider the following data of the country ABC (ABC) economy in 2019: million ($) Private consumption expenditure $900,000 Gross domestic Investment $240,000 Government expenditure $30,000 Government welfare payment $20,000 Total exports $1,500,000 Total imports of goods $1,400,000 Total imports of services $160,000 ----------------------------------------------------------------------------------------------- Total population 8,000,000 Total working age population 7,000,000 Total labor force 3,650,000 Total number of unemployed person 250,000 Total underemployed person 180,000 a) Calculate A BC economy’s nominal GDP in 2019. (1 mark) b) If GDP deflator...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT