Question

Consider the following economy: Planned consumption: ? = 900 + 0.5(? − ?) − 180? Planned...

Consider the following economy: Planned consumption: ? = 900 + 0.5(? − ?) − 180? Planned investment: ? = 950 − 180? Real money demand: ( ? ? ) ? = 0.5? − 180?

a. (2 pts) Suppose ? = 400, ? = 450, and ? = 9,750. Find an equation for the IS curve.

b. (2 pts) Find an equation for the LM curve.

c. (2 pts) Find an equation for the aggregate demand curve. Express the AD curve as ? being a function of ?. (Hint: Use the IS and LM equations to find a relationship between ? and ?.)

d. (5 pts) If the full employment output ? = 4,000, what are the equilibrium values for the level of aggregate prices, output, consumption, investment, and the real interest rate?

e. (2 pts) Suppose that the money supply falls to ? = 5,250. What is the equation for the AD now?

f. (5 pts) Repeat (d) given that money supply falls to 5,250

g. (3 pts) Explain what you find using the IS-LM diagram, and the LRAS curves drawn in the ? − ? space. Argue whether IS, LM shifted or not and why

PLEASE ONLY ANSWER E- G

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
Suppose desired consumption and desired investment are ?? = 300 + 0.75(? − ?) − 300?...
Suppose desired consumption and desired investment are ?? = 300 + 0.75(? − ?) − 300? T = 100 + 0.2Y ?? = 200 − 200? G is the level of government purchases and G=600 Money demand is ?? ? = 0.5? − 500(? + ??) where the expected rate of inflation, ??, is 0.05. The nominal supply of money M = 133,200. Suppose the full employment output is 2500 and the price level in the short run is 120....
2) Consider the following Keynesian model of the economy. Consumption Function: C = 12 + .6...
2) Consider the following Keynesian model of the economy. Consumption Function: C = 12 + .6 Y d, Investment Function: I = 25 − 50 r, Government Spending: G = 20, Tax Collections: T = 20, Money Demand Function: L d = 2 Y − 200 r, Money Supply: M = 360, Price Level: P = 2. a) Find an expression for the IS curve and plot it. b) Find an expression for the LM curve and plot it. c)...
Consider the following Keynesian (short-run) model along with the Classical (long-run) model of the economy. Labor...
Consider the following Keynesian (short-run) model along with the Classical (long-run) model of the economy. Labor Supply: Le = 11 Capital Supply: K=11 Production Function: Y-10K.3(Le).7 Depreciation Rate: &=.1 Consumption Function: C=12+.6Yd Investment Function: I= 25-50r Government Spending: G=20 Tax Collections: T=20 Money Demand Function: Ld= 2Y-200r Money Supply: M=360 Price Level: P=2 Find an expression for the IS curve and plot it. Find an expression for the LM curve and plot it. Find the short run equilibrium level of...
Suppose that economy of Portugal is characterized by the following C = 200 + 0.5 (Y...
Suppose that economy of Portugal is characterized by the following C = 200 + 0.5 (Y - T) Represents the consumption function I = 600 – 30 r represents the investment function G = 300 represents the public spending T = 300 represents the level of taxation (m/p)d = y - 40 r represents the money demand function (m/p)s = 1500 r represents the real money supply d Y represents the global output Find the IS curve the LM curve...
5) The economy has an aggregate production function fN=15N-12N2 , where N is labor input. Labor...
5) The economy has an aggregate production function fN=15N-12N2 , where N is labor input. Labor supply is given by NsWP=-5+3WP , where W is the money wage and P is the price level. Desired consumption depends on real income, Y, and can be written as CdY=10+0.7Y . Given real interest rate, r, the desired investment is Idr=30-200r . The real money demand is characterized by LY,r=10+Y-200r . Government spending, G, and nominal money stock, M, is given as G=0...
Suppose that in a closed economy with a public sector the following relations apply: Consumption function:...
Suppose that in a closed economy with a public sector the following relations apply: Consumption function: C = 200 + 0.60Yd where (Υd = Y –T) Desirable investment: Ιp = 400 - 560r Government expenditure: G = 250 Taxes: Τ = 50 Real money demand for transactions: 0.5Y Real money demand for speculation: 600 - 2200r Nominal amount of money: M = 1000 Price level: P = 1.25 A. Find the equilibrium in the commodity market (IS curve). B. Find...
The components of planned aggregate spending in a certain economy are given by Consumption Function: C...
The components of planned aggregate spending in a certain economy are given by Consumption Function: C = 800 + 0.75(Y - T) – 2000r Planned Investment: I p = 400–3000r Government Revenue and Spending: T = 300 and G = 450 Net Export: NX = 75 where r is the real interest rate (For example, r = 0.01 means that the real interest rate is 1 percent). (1) Find the level of public saving. (2) Suppose that the real interest...
3. The components of planned aggregate spending in a certain economy are given by Consumption Function:...
3. The components of planned aggregate spending in a certain economy are given by Consumption Function: C = 800 + 0.75(Y - T) – 2000r Planned Investment: Ip = 400–3000r Government Revenue and Spending: T = 300 and G = 450 Net Export: NX = 75 where r is the real interest rate (For example, r = 0.01 means that the real interest rate is 1 percent). (1) Find the level of public saving. (2) Suppose that the real interest...
The production function in an economy is Y = 2(7N-0.02N2) With this production function, the marginal...
The production function in an economy is Y = 2(7N-0.02N2) With this production function, the marginal product of labor is .mpn = 14 - .08N. Labor Supply is , N8 = 88+2w, Desired consumption is , Cd=100+0.8Y -5020r -.5G, Desired investment is Id=100-500r Real money demand is Md/P = Y-2000 (r+?e) Other variables are expected inflation ?e=.05 , government purchases G = 200, and money supply is M = 2100 1. Find the general equilibrium values of the real wage,...
An economy is initially described by the following equations: C = 500 + 0.75(Y - T);...
An economy is initially described by the following equations: C = 500 + 0.75(Y - T); I = 1000 - 50r; M/P = Y - 200r; G = 1000; T = 1000; M = 6000; P = 2; where Y is income, C is consumption, I is investment, G is government spending, T is taxes, r is the real interest rate, M is the money supply, and P is the price level. a. Derive the IS equation and the LM...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT