ZuoTi.Pro
Question

For all of the questions below consider a closed economy. Make sure to include an explanation...

For all of the questions below consider a closed economy. Make sure to include an explanation for each question.

3) Using an IS-LM-FE framework analyze the consequences of the following event according to a Real Business Cycle economist. Total factor productivity temporarily declines (adverse supply shock).

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Initially the equilibrium output is at Y0. the total factor productivity temporarily declines, the production function shifts downwards leading to a decline in output . This reduces the demand for labour and decreases the nominal wages. This leads to leftward shift of FE curve. This reduces the potential output to Y1 and the firms respond by increasing prices which will shift the LM curve up and towards the left. However, these shifts are temporary and in the long run the output is back to the initial equilibrium.

9

0 0
Add a comment
Know the answer?
Add Answer to:
For all of the questions below consider a closed economy. Make sure to include an explanation...
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. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • For all of the questions below consider a closed economy. Make sure to include an explanation...

    For all of the questions below consider a closed economy. Make sure to include an explanation for each question. 2) Using an IS-LM-FE framework analyze the consequences of the following event according to a Real Business Cycle economist (also called a Neo-classical economist). Government spending increases temporarily.

  • For all of the questions below consider a closed economy. Make sure to include an explanation...

    For all of the questions below consider a closed economy. Make sure to include an explanation for each question. 1) Using an IS-LM-FE framework analyze the consequences of the following event according to a Keynesian economist. Central bank increases the money supply.

  • For all of the questions below consider a closed economy. Make sure to include an explanation...

    For all of the questions below consider a closed economy. Make sure to include an explanation for each question. 4) Using an IS-LM-FE framework analyze the consequences of the following event according to a Keynesian economist. The consumer confidence drops, which leads people to form more pessimistic expectations about future incomes.

  • Please make sure to answer all parts, previous expert answers have not and it's really confusing!!...

    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....

  • Q5 25 points) 5)- Consider if in a given economy, the parliament approves an increase in...

    Q5 25 points) 5)- Consider if in a given economy, the parliament approves an increase in minimum wage. Starting from the initial medium run equilibrium, discuss the effects of this policy in following questions. (Total 25 points) a)- Using a set of WS/PS curves, and only in labor market, in step by step way, explain the impacts. (6) b)- Using the aggregate supply and demand (AS/AD), and IS/LM curves, show the short and medium run equilibrium points. [No explanation. Only...

  • 1. (45 points) Consider the closed-economy one-period macroeconomic model developed in class. The...

    1. (45 points) Consider the closed-economy one-period macroeconomic model developed in class. The consumer is endowed with h units of time, and chooses consumption C and leisure ` to maximize U = log(C) + θlog(`), subject to the budget constraint C = wNs + π. Production is described by Y = zNd . Government spending G is financed with a proportional revenue tax (tax rate τ ) on the firm. (a) (10) Find the firm’s optimal demand for labor Nd...

  • Please answer this question clearly and make sure to include all ( Criteria for adequate performa...

    please answer this question clearly and make sure to include all ( Criteria for adequate performance ) that shows in the table below the question please explain by typing the words not by the hand, thank you 2. Archimedes once said that given a long enough lever, and a firm spot to place the fulcrum (pivot), he could (in theory) move the Earth. More practically, let's suppose you want to lift a 1000 kg boulder that happens to have landed...

  • Among the most important problems of implementing fiscal policy include all except which of the following?...

    Among the most important problems of implementing fiscal policy include all except which of the following? Correctly timing the desired fiscal stimulus, given the inevitable lags and forecasting errors Determining how large a stimulus to apply Assessing when policy actions should be reversed Determining how long a time lag to apply If the central bank does not use accommodating monetary policy, a fiscal stimulus is likely to increase interest rates, which in turn, will cause planned investment to decrease. What...

  • Do all parts please. No explanation needed. Part 1: Most of the reduction in poverty rates...

    Do all parts please. No explanation needed. Part 1: Most of the reduction in poverty rates since World War II occurred as a result of the 1996 welfare reforms. 1940s War On Poverty. 1960s War On Poverty. end of "welfare as we know it." Part 2 Policies focused on putting people to work by having them construct parks would be considered demand-side policies. monetary policies. supply-side policies. demand-side and supply-side policies. Part 3 A 15-year old that wants a job...

  • QUESTION 10 Consider the monthly data, including the estimates for March 2020, and the information in...

    QUESTION 10 Consider the monthly data, including the estimates for March 2020, and the information in the articles. Which of the following is the best analysis of and prediction for the money market in the U.S. economy for the next few months?   a. Shortages are causing panic buying by households, which has increased money demand. Lenders are increasing their lending to keep up with the needs of households and businesses. Money demand is increasing more than money supply. b. Shortages...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT