Question

A) What relationship does the IS curve plot? Explain, in words and graphically, why the IS curve slopes downward. Be sure to label the graph properly.

B) What relationship does the LM curve plot? Explain, in words and graphically, why the LM curve slopes upward. Be sure to label the graph properly.

Answer #1

A) IS curve represernt different combination of income and interest rate where goods market is in equilibrium.

IS curve is negatively sloped because higher level of interest rate reduces investment spending and thereby reduces equilibrium level of income.

B) LM curve represents different combination of income and interest rate at which money market is in equilibrium Equilibrium in money market requires equality of demand for money and supply of money.

LM curve is positvely sloped which means that money market equilibrium is attained at higher Y and higher i. Slope of LM is numerically equal to k/h.

Explain why the SAS curve slopes upward and the LAS curve is
vertical.

Show graphically and explain the relationship between the total
cost curve and average cost, marginal cost and average variable
cost curves.
please provide the graph and write electronic version. Thank
you.

(16 marks total) Using the IS-LM model discussed in chapter 10,
suppose you’re given the following information: • The consumption
function is given by C = 40 + 0.5 (Y − T). • The investment
function is given by I = 150 − 10r. • T = 120, and G = 170. (a) Find planned expenditure P E as a function of Y and r. (b)
For the case where r = 8, find the value of Y that
produces...

Why does the IS curve have the shape that it does? Explain using
words and diagrams.

Explain why the aggregate supply (AS) curve slopes upward in the
short-run. Explain how the concept of “full employment” is related
to a vertical AS curve in the long-run.

Short Run Cost
1)Why is the ATC U-Shaped?
b)Why is marginal curve upward sloping in the short run ?
c)Where and why does the MC curve cross the ATC curve?
d)Given values for ATC and AVC,how would you determine Fixed
cost (what are the steps necessary to get from the first twoto the
last one )?
e)Given ATC,how would you determine total cost?
f)Graphically show and verbaly explain what the general pattern
of and relationship between fixed cost,variable cost and...

How does the price in the kink demand curve arise?
explain graphically. Also
give an example of kinked
dd curve in practice.

Explain why the SAS (short-run aggregate supply) curve slopes
upward and the LAS (long-run aggregate supply) curve is
vertical

Explain the law of demand. Why does a demand curve slope
downward? How is a market demand curve derived from individual
demand curves?

Explain the law of demand. Why does a demand curve slope
downward? How is a market demand curve derived from individual
demand curves?

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