Question

Evaluate how the IS curve and MP curve might be affected (if at all) when the...

Evaluate how the IS curve and MP curve might be affected (if at all) when the following occurs:

A decrease in financial frictions.

An autonomous easing of monetary policy.

An increase in the current inflation rate.

Firms become more optimistic about the future of the economy.

The new Federal Reserve chair begins to care more about fighting inflation.
Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

If you are satisfied with a answer plz upvote thank you

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
For each of the following, describe how (if at all) the IS curve, MP curve and...
For each of the following, describe how (if at all) the IS curve, MP curve and AD curves are affected. An increase in financial frictions A decrease in current inflation rate An increase in taxes and an autonomous easing of monetary policy
T/F 1. The Federal Reserve is one of the least independent in the US government. T/F...
T/F 1. The Federal Reserve is one of the least independent in the US government. T/F 2. Increase spending growth shifts the AD curve inwards, and decreased spending growth shifts the AD curve outwards. T/F 3. Monetary policy is more effective at combating real shocks that AD shocks. T/F 4. Bringing inflation down is more difficult than raising it because wages and prices are sticky downward. T/F 5. The Federal Reserve must operate in real time, even though a lot...
Consider the following changes in the macro economy. Use the IS curve to analyze them and...
Consider the following changes in the macro economy. Use the IS curve to analyze them and explain what would happen to it (shift of the curve, movement along the curve) and the equilibrium variables. Specifically, you should understand what will happen to GDP in the short run, and why this change occurs. The Federal Reserve undertakes policy actions that have the effect of lowering the real interest rate below the marginal product of capital (MPK). ANS: JUSTIFY THE ANSWER Consumers...
Classify each of the following into which curve is going to shift in which direction? 2....
Classify each of the following into which curve is going to shift in which direction? 2. Explain how will each of these affect the economy in the short run and the long run (in terms of output, unemployment and inflation) a. Government decides to take policy to reduce deficit. b. Construction workers goes on a strike for 2 months. c. US dollar depreciates with respect to euro d. People become more optimistic about the economy e. Productivity of U. S...
If the economy began at potential output when a negative aggregate demand shock hit, what would...
If the economy began at potential output when a negative aggregate demand shock hit, what would be the traditional monetary policy action to stabilize output? lower interest rates to increase spending and shift the AD curve to the right lower interest rates to increase spending and shift the AD curve to the left increase interest rates to increase spending and shift the AD curve to the right lower interest rates to decrease spending and shift the AD curve to the...
56. Over time, the flattening and shifting inward of the traditional Phillips Curve suggests that: (a)...
56. Over time, the flattening and shifting inward of the traditional Phillips Curve suggests that: (a) the relationship between inflation and unemployment is stronger than ever; (b) a 1% change in the inflation is now associated with smaller changes than before in the unemployment rate; (c) every unemployment rate is now associated with a lower inflation rate than previously; (d) the U.S. now has an R* much higher than 1%. 57. According to the modern Phillips Curve, current inflation statistically...
  3.   Suppose that consumers become pessimistic about the future health of the economy, and so cut back...
  3.   Suppose that consumers become pessimistic about the future health of the economy, and so cut back on their consumption spending. What will happen to aggregate demand and to output? What might the government have to do to keep output stable?             4.   Suppose the Federal Reserve, which is the central bank of the U.S., decided to lower the monetary policy interest rate. Use the macroeconomic model to analyze the possible effects of this event on Canada’s net capital outflow, net exports, and...
All answers should have the AD OR AS or BOTH in them. The economic begins in...
All answers should have the AD OR AS or BOTH in them. The economic begins in long-run equilibrium. Then one day, the president appoints a new chair of the Federal Reserve. This new chairman is well known for his view that inflation is not a major problem for an economy. a. How would this news affect the price level that people would expect to prevail? b. How would this change in the expected price level affect the nominal wage that...
How can the Fed influence the location of the LM curve and the interest rate? To...
How can the Fed influence the location of the LM curve and the interest rate? To help answer this question, assume that the demand for real balances is given by (1) (M/P)d = 0.5Q ‑40i and that money supply is initially fixed at (2) (M/P)s = 400. (since prices are fixed you may assume P=1). If money supply were increased to 500, and real output Q were constant at (3) Q = 1600, How would the intercept of the LM...
The heydays of fiscal policy was 1960s. Since then it lost credibility due to concern of...
The heydays of fiscal policy was 1960s. Since then it lost credibility due to concern of persistently large budget deficits and uncertainty over political system whether it can make tax and spending decisions in a timely way to achieve desirable stabilization outcomes. Monetary policy henceforth was the dominant policymaking tool. During the late 1970s, an overly loose monetary policy was commonly thought to have contributed to the burst of double-digit inflation in 1979 and 1980. Tight monetary policy engineered by...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT