B2. Closed Economy IS-LM-FE model: The behaviour of households and firms in a closed economy is...
B3. Open Economy IS-LM-FE model: The behaviour of households and firms in an open economy is represented by the following equations: Full-employment outputY-1200 red consumption Cd = 350 + 0.5Y-200r : Desired investmentd 250-300r Government purchasesG 95 Net exports : NX = 100-01-05e Real exchange rate : 90. Assume that the real interest rate, r, does not deviate from the foreign interest rate and that the economy is initially in general equilibrium. ve the open-economy IS curve writing the real...
Liquidity Trap in the IS-LM Model (50 points) Consider a closed economy in which output is the sum of consumption, investment and government purchases Y = C + I + G, and where C, I and G are respectively given by C = 5000 – 2000 r + 0.8(Y– T), I = 1500 – 3000 r, and G = 2500. Note also that lump-sum taxes T are given by 1250. (a) (5 points) Recalling that national savings equals S =...
Please make sure to answer all parts, previous expert answers have not and it's really confusing!! Closed Economy IS-LM-FE model. The behaviour of households and firms in a closed economy is represented by the following equations Y50N - 0.5N2 Cd 40 + 0.8Y d = 80-500r 0.5y-250(r + π*) where π-0.02 = _ where Y is output, N is labour, w is the real wage, Ns is the amount of labour supplied Cd is desired consumption. Id is desired investment....
Question 1: General Equilibrium in closed and open economies [50 marks] Consider the following closed Keynesian economy Desired consumption, Cd = 1000 + 0.6(Y-T) - 300r; Desired investment, Id = 600 - 300r; Money deman d, L = 0.6Y - 300r; Output, Ȳ = 4000; Expected inflation, πe = 0; Assume that we are in a closed economy. Suppose that T = G = 300 and M = 8000. Find the equilibrium values of output, consumption, investment, the real interest...
B4. Closed economy Keynesian model: The aggregate demand-side of the economy Rigidia is well-described by a standard IS-LM-FE framework while the short-run aggregate supply side is characterized by (SRAS) aggregate output/income, Y is the full employment output level, P is the Here Y is realized aggregate realized price level, Pe is the expected price level and b is a constant that depends on the slope of the labour demand curve. Explain the effects of each of the following on the...
Just e) f) and g) if possible please Question 5: The IS-LM model Consider the following IS-LM model: Consumption: C = 200 +0.25YD Investment: I=150 + 0.25Y - 10001 Government spending: G=250 Taxes: T=200 Money demand: L(i,Y)-2Y - 8000 Money supply: Ms /P=1600 (a) Derive the equation for the IS curve. (Hint: You want an equation with Y on the lefthand side and all else on the right) (b) Derive the equation for the LM curve. (Hint: It will be...
Question 1: General Equilibrium in closed and open economies [50 marks] Consider the following closed Keynesian economy Desired consumption, Cd = 1000 + 0.6(Y-T) - 300r; Desired investment, Id = 600 - 300r; Money deman d, L = 0.6Y - 300r; Output, Ȳ = 4000; Expected inflation, πe = 0; Calculate the investment and consumption. c. Find the new long-run equilibrium by taking M = 6000 and the price level as flexible (repeat part a). The following are the steps...
Consider the following model of the economy Production function: Y = A·K·N – N2/2 Marginal product of labor: MPN = A·K – N. where the initial values of A = 10 and K = 10. The initial labor supply curve is given as: NS = 50 + 4w Initial conditions in the goods market Cd = 790 + .50(Y-T) – 500r Id = 1000 – 500r G = 800 T = 100 Md/P = 110 + 0.5Y- 1000(r + πe) ...
You will need to analyse the IS-LM model algebraically. Setting up a closed economy for the short-run model, the market for goods and services is given as Yz = Ct + It +G+ whereby - Ct ac + c(V– at)) ⓇY+ - It (a dj – 5(r+ – 7)) ⓇY -) * - G+ = ag XYZ a. To obtain the IS curve, solve for short-run output, Ķz. b. How does the slope of the IS curve depend on the...
Econ 105A Jang-Ting Guo Handout/Homeowork 4 1. The following equations describe an economy. Think of C, 1, G, etc., as being measured in billions and i as a percentage, e.g., a 5 percent interest rate implies i = 5. C = 0.8(1-t)Y t = 0.25 I = 900 - 50i G = 800 L = 0.25Y - 62.5i M=500 P=1 (a) What are the (1) marginal propensity to consume out of disposal income and (ii) marginal propensity to consume out...