9-10) Portray an initial equilibrium denoted by the subscript 0, in the savings and Investment space,...
Portray an initial equilibrium denoted by the subscript 0, in the savings and Investment space, Money Market, the IS-LM space, and the AD space, and show how an increase in the money supply would affect these. Be sure to label all shift variables. Assume MPS > MPI IS-LM Goods or Savings-Investment Market r Money Market r M Y AD
Portray an initial equilibrium denoted by the subscript 0, in the savings and Investment space, Money Market, the IS-LM space, and the AD space, and show how an increase in the money supply would affect these. Be sure to label all shift variables and list causal/ explained variables. Assume MPS < MPI. Goods or Savings-Investment Market IS-LM IS Money Market AD -A
OY 10. By referring to Figure 7-1, an increase in the money stock a shifts the LM schedule to the right from LMoto LM b shifts the LM schedule to the left from LMo to LM e leaves the LM curve unchanged at LM. d. shifts neither the IS nor the LM schedule. 11. Changes in all of the following shift the LM curve except a. the price level. b. income. c. the money supply. d. money demand. e. all...
Suppose that Congress is going to increase government purchases on a permanent basis. Use the IS-LM/AS-AD tools to analyze the implications in the short run and in the long run. (Assume the following. Prices are completely fixed in the short run and completely flexible in the long run. Taxes remain constat. Consumption is a function of disposable income, with a constant marginal propensity to consume. Investment is a function only of interest rate. Our starting point in full equilibrium output.)...
Savings/Investment in Class GDP = 10 Consumption = 7 Government Spending = 2 Private Savings = 1 Transfer Payments = 1 A) Calculate Taxes, Investment, Public Savings and National Savings B) Draw the graph of the market for loanable funds, assuming the equilibrium interest rate i* = 3% Make sure to label the axis and equilibrium points C) If G increases so that now G = 2.5, recalculate Public Savings, National Savings and Investment. (assume that any other variables stay...
supposed investment spending is less interest sensitive, with the investment equation now presented as I=$120-3i instead of I=150-6i. The K equation would then be y=$1100-15i instead of $1250-30i. We shal assume that the nominal money supply remains at $150 and the deman for money is 0.20y-4i a. find simultaneous equilibrium for the money and goods market when the price level is 1.00 1.20 1.50 b.plot the relationship of real output and the price level and label the schedule AD'
Recall the IS-LM model. In particular, the goods-market equilibrium condition was Y = C (Y − T ) + I (r) + G, and the money-market equilibrium condition was m = L (r, Y ). Here, the exogenous variables are G (government spending), T (taxes), and m (real money supply). The endogenous variables are Y (output, or income) and r (real interest rate). C (·) is the consumption function, which is increasing in disposable income Y − T , but...
Please box answers! Thank you. 11. Monetary policy and the LM curve Aa Aa The following graph shows the demand and supply of real money balances in a hypothetical economy. Use the black point (X point) to indicate the equilibrium in this market. Dashed drop lines will automatically extend to both axes. REAL INTEREST RATE [Percent) 10 Equilibrium Supply New Supply New Equilibrium Demand 3 0 10 20 30 40 50 60 70 80 90 100 REAL MONEY BALANCES Help...
4. If nominal money demand doubles and the real money supply also does what happens to the price level ( ). The price level increases by a factor of four b. The price level doubles ). The price level is unchanged. d. The price level falls by one-half. IL Short-Answer O stiens (19 points) 5. (7 points) If the Federal Reserve sold government securities, then the money supply (increase decrease remain the same), the money he would _(increase decrease remain...
What reference? Name: For each of the following events, use an AD-AS diagram to show the short-run and long-run effects on output and the price level (inflation rate); identify any output gap. Assume the economy starts in long run equilibrium. (1) The government reduces income taxes AS P AD (2) A decrease in consumer confidence leads to lower consumption spending AS P. AD AD-AS practice assignment.pdf 2/2 (3) The Fed decreases the money supply AS Pe K AD y* (4)...