Question

Q1) Define and derive the IS-LM model. More specifically, how we obtain the IS-LM equilibrium? Please explain every step-in detail

Answer #1

IS-LM model focuses on goods and money market equilibrium which shows relationship between rate of interest and output level.

**Derivation of IS curve:** In an closed economy,
production of goods is equal to demand in an economy.

Output = Consumption + Investment + Government Spending

Investment is dependent on interest rate and have negative relationship with each other. Rise in rate of interest reduces the level of output production which dervies Investment - Saving (IS) curve which is downward sloping.

**Derivation of LM curve:** It shows relationship
between liquidity and money. As there is equilibrium in money
market occurs when money demand equals money supply where money
supply is fixed and money demand rises when output rises. Money
market shows a positive relationship between rate of interest and
output level.

Q1) Define and derive the IS-LM model. More specifically, how we
obtain the IS-LM equilibrium? Please explain every step in detail.
What happens if autonomous government spending increases? Use
graphs to illustrate your points. PLEASE DON'T USE BOOK
DEFINITIONS!

Derive the LM curve in Hick’s IS-LM M model. Start with
the basic essentials of the model, and then explain the main
relationship that determines the shape of LM curve. How would the
monetaries draw the LM curve? How could keynes draw the LM curve?
Explain the reason for different shapes.

3. In the IS-LM model, explain how does an increase in taxes
affect equilibrium in-come. If you use any diagram, label your axes
and curve clearly

2. Aggregate demand
a. Write down the AD relation.
b. Use the IS-LM model to derive the AD curve. What could cause
the shift of AD curve?
3. Monetary expansion
a. Assume the economy is initially at Yn. Draw the AD-AS model
and label the initial equilibrium as A. Draw the corresponding
IS-LM model and indicate the equilibrium A.
b. Suppose now there is a monetary expansion. Show the short run
effect on price level, output, and interest rate in...

We can use the Cournot model to derive an equilibrium industry
structure. For this purpose, we will define an equilibrium as that
structure in which no firm has an incentive to leave or enter the
industry. If a firm leaves the industry, it enters an alternative
competitive market in which case it earns zero (economic) profit.
If an additional firm enters the industry when there are already n
firms in it, the new firm’s profit is determined by the Cournot...

Use the IS-LM model to show what happens to output and the
interest rate in equilibrium. Briefly explain how equilibrium is
adjusting in the goods and/or money markets. One IS-LM graph is
necessary for each part. Clearly label your graph for full
credit.
(a) The central bank increases the money supply
(b) The government increases transfers to households
(c) The stock markets are booming and household wealth
increases

taoism is notoriously mystical and metaphysical. what practical,
ethical guidance can we derive from it? please explain in
detail!!

Graphically (using the IS-LM model) illustrate and explain what
effect an increase in default-risk premium (x) will have on the
equilibrium output. How can we restore teh output to its original
level following this change?

Q1.
How do you define a shallow foundation in term of the
foundation depth?
Can we state that the long-term settlement and the short-term
settlement of a foundation constructed on a sandy layer are almost
the same? Please briefly justify your answer.

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.

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 18 minutes ago

asked 37 minutes ago

asked 41 minutes ago

asked 49 minutes ago

asked 59 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago