![Consider the following algebraic version of the IS-LM model C 200+0,5 YD (C is consumption, YD is disposable income); G (public spending) 100; T (taxes) 100 1. 350 4000i +0,1 Y (I is investment, i is interest rate, Y is real income). Real demand for money: md-0,5 Y-7500, real money supply: (MVP-mf-250; (i) Write the equations that represent the IS and LM relations. [3pl (ii Find the equilibrium values of real GDP and interest rate. [3p] (i) Find the equilibrium values of consumption, investment, and private saving. [3p] (iv) Let suppose a negative shock on autonomous consumption, which decreases from 200 to 100. If the central bank wants to stabilize output at the current level, at which value should it set the new money supply? (hint: first, compute the target interest rate, then the money supply). [3p]](http://img.homeworklib.com/questions/a52f9850-75a7-11ea-bb99-c590d58c9ef8.png?x-oss-process=image/resize,w_560)
PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND JUSTIFY THANKS
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PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND JUSTIFY
THANKS
Consider the following algebraic version...
PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND JUSTIFY THE ANSWERS THANKS A LOT Assume...
PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND JUSTIFY THE
ANSWERS THANKS A LOT
Assume that the country of Flatland is a closed economy and it is currently in a situation of short and medium run equilibrium. 1. a. Assume that the Central Bank of Flatland wants to increase the short-term interest rate i. Identify the open market operation that the Central Bank would use. [2p] ii. Is there any alternative to an open market operation? Explain. [2p] ii...
Consider the following IS-LM model, in which the central bank targets an interest rate of i...
Consider the following IS-LM model, in which the central bank targets an interest rate of i C 11500.3YD 1 = 2000 + 0.3Y-8000i G 2000 T 1500 = 4Y-16,000i -= 0.02 c) Solve for value of the real money supply that the central bank must set to achieve its interest rate target, and the equilibrium level of output, by combining the IS and LM relations. Compute the values of equilibrium consumption, investment, and money demand. If the GDP deflator is...
Derivation of the Aggregate Demand Curve Suppose the economy of Y is described by the following...
Derivation of the Aggregate Demand Curve Suppose the economy of Y is described by the following equations: Consumption: C = 750 + 0.60 Yd where Ydrefers to disposable (post-tax) income. Taxes: T = 300 Government Expenditure: G = 30+0.2Y Investment: I = 400 -2000r Money Demand: L(r,Y) = Y – 10,000r Nominal Money Supply :Ms=$12000 Price Level P1=$3 Calculate the tax multiplier in Y Derive(sketch) the IS curve for Y. Derive(sketch) the LM curve for Y Solve for the equilibrium...
PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND EXPLAIN .. THANKS A LOT Assume that...
PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND EXPLAIN ..
THANKS A LOT
Assume that the country of Rokovoko is a closed economy and it is currently in a situation of short and medium run equilibrium. 1. Assume that the government of Rokovoko wants to decrease the public deficit without decreasing the level of public expenditures a. i. ii. Which policy should the government adopt? [2pl Explain the short-run effects of this policy on interest rate, money demand, and...
Just e) f) and g) if possible please Question 5: The IS-LM model Consider the following...
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...
Consider the following economy: Y = AK0.5N0.5 A = 1 K = 100 N = 100...
Consider the following economy: Y = AK0.5N0.5 A = 1 K = 100 N = 100 T = 15 G = 15 C = 10 = 0.5(Y-T) - 0.5r I = 25-2r L = 50 + 0.5y - 10r M = 225 Pie = 0 1. Derive the equation for the IS curve 2. Derive the equation for the LM curve 3. General equilibrium values of output, real interest rate, and price level 4. G increases by 6 to 21,...
Fantasy Island is a closed economy and is characterized by the following equations: Consumption: C =...
Fantasy Island is a closed economy and is characterized by the following equations: Consumption: C = 4000+ 0.75(Y-T) Investment: I = 2000 - 5000r Government spending: G = 3500 Budget surplus = 500 Real money demand: L = 0.4Y - 2500i, where i=r+ Expected inflation: Tº = 0 Production function: Y = 10 K12L 1/2 The nominal money supply = 7250 Note: Interest rates, i and r, are expressed in decimal points, i.e., ifr=0.5, then r = 50%. Suppose the...
IS LM type question
The following equations describe the economy.• C = 100+ 0.8 Y• I = 200- 1000 i• L = Y – 10000 iInitially, government expenditure is $550, and taxes are $500. The real money supply equals$900.a. Derive the formulas for the IS curve and LM curve. (4pts)b. What are the initial levels of GDP, the interest rate, consumption, and investment?Owing to a drop in investor confidence, the autonomous component of investment dropsby 90. (2pts)c. By how much do income, the interest...
1. Consider an economy described by the following: C = 400 +0SY -IA - TRỊ I...
1. Consider an economy described by the following: C = 400 +0SY -IA - TRỊ I = 150 -0.18-10 G = 200, T = 2Y, TR = 100 transfers, G- Where consumption, I investment, t is the marginal tax rate, TR government purchases, and is the interest rate. a. Derive the Is relation. (Hint: You want an equation with Y on the left hand side and everything else on the right.) b. What is equilibrium Y if the interest rate...
Need help, please show work Blank options for B, E, and F are either 'steeper or flatter." Blank ...
Need help, please show work
Blank options for B, E, and F are either 'steeper or
flatter."
Blank options for C are "decreases in taxes or increase in govt
purchases."
This problem asks you to analyze the IS-LM model algebraically. First the consumption function and investment function from the goods market will be examined. Then, the money demand function from the money market will be examined. The Goods Market: Suppose consumption is a linear function of disposable income: C(Y- Ta...
PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND JUSTIFY THE
ANSWERS THANKS A LOT
Assume that the country of Flatland is a closed economy and it is currently in a situation of short and medium run equilibrium. 1. a. Assume that the Central Bank of Flatland wants to increase the short-term interest rate i. Identify the open market operation that the Central Bank would use. [2p] ii. Is there any alternative to an open market operation? Explain. [2p] ii...
Consider the following IS-LM model, in which the central bank targets an interest rate of i C 11500.3YD 1 = 2000 + 0.3Y-8000i G 2000 T 1500 = 4Y-16,000i -= 0.02 c) Solve for value of the real money supply that the central bank must set to achieve its interest rate target, and the equilibrium level of output, by combining the IS and LM relations. Compute the values of equilibrium consumption, investment, and money demand. If the GDP deflator is...
PLEASE ANSWER ALL THE POINTS AND WRITE CLEARLY AND EXPLAIN ..
THANKS A LOT
Assume that the country of Rokovoko is a closed economy and it is currently in a situation of short and medium run equilibrium. 1. Assume that the government of Rokovoko wants to decrease the public deficit without decreasing the level of public expenditures a. i. ii. Which policy should the government adopt? [2pl Explain the short-run effects of this policy on interest rate, money demand, and...
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...
Fantasy Island is a closed economy and is characterized by the following equations: Consumption: C = 4000+ 0.75(Y-T) Investment: I = 2000 - 5000r Government spending: G = 3500 Budget surplus = 500 Real money demand: L = 0.4Y - 2500i, where i=r+ Expected inflation: Tº = 0 Production function: Y = 10 K12L 1/2 The nominal money supply = 7250 Note: Interest rates, i and r, are expressed in decimal points, i.e., ifr=0.5, then r = 50%. Suppose the...
1. Consider an economy described by the following: C = 400 +0SY -IA - TRỊ I = 150 -0.18-10 G = 200, T = 2Y, TR = 100 transfers, G- Where consumption, I investment, t is the marginal tax rate, TR government purchases, and is the interest rate. a. Derive the Is relation. (Hint: You want an equation with Y on the left hand side and everything else on the right.) b. What is equilibrium Y if the interest rate...
Need help, please show work
Blank options for B, E, and F are either 'steeper or
flatter."
Blank options for C are "decreases in taxes or increase in govt
purchases."
This problem asks you to analyze the IS-LM model algebraically. First the consumption function and investment function from the goods market will be examined. Then, the money demand function from the money market will be examined. The Goods Market: Suppose consumption is a linear function of disposable income: C(Y- Ta...
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