Consider the following model of a closed macroeconomy. The Labour Market Y = 60N - N2/2...
Consider the following model of a closed macroeconomy, The Labour Market Y 63.246N -N2/12 N 63.246-WIP N. = 0.4142W / P (1) (2) (3) (4) Production function Labour demand Labour supply Labour market equilibrium The Goods Market C= 110 +0.75% ) (5) (6) (7) (8) (9) (10) Consumption function Investment function Government expenditure Disposable income Tax function Goods market equilibrium I 10 + 0.2 Y _ 200i G 200 T -333.333 Y=C+I+G The Money Market L = 1 00 +...
Compute the new equilibrium values of * * Y i ' and ' . Consider the following IS-LM model of a closed macroeconomy The Goods Market (1)Components of planned aggregate expenditure (2) Consumption function (3) (4) Government expenditure (5) Disposable income (6)Tax function (7) Goods market equilibrium 1=bo +by-b21 G=G Y,Y-T Planned investment The Money Market し=do +d,Y-d,i (8) (9) (10) Money demand Money supply Money market equilibrium MIP-MIP All of the variables here are as listed in the notes,...
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...
2. Consider the following model of the labour market. where w is the wage rate, Ld is labour demanded by the firms and Ls is labour supplied by workers What condition should δ satisfy in order for the second equation to be a reasonable labour supply function (i) What condition should satisfy in order for this system to have a unique equilibrium. (iii) Assume that δ = 1, express the systemin matrix form and use matrix algebra to find the...
2. Consider the following model of the labour market. where w is the wage rate, Ld is labour demanded by the firms and Ls is labour supplied by workers What condition should δ satisfy in order for the second equation to be a reasonable labour supply function (i) What condition should satisfy in order for this system to have a unique equilibrium. (iii) Assume that δ = 1, express the systemin matrix form and use matrix algebra to find the...
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) ...
4. Consider the following numerical example of the IS-LM model C 0.8(Y T); I 1520 240i; T 150 0.25Y; G 200; (M/P)s 1800 (M/P)D 300 0.75Y 300i a. Derive the IS and LM relation. (10%) b. Solove for the equilibrium values of output, interest rate, disposable income.(10%) 400 and T becomes T 350 0.25Y c. Suppose that G rises by 200 to G = Simultaneously, the central bank decreases money supply to 1500. Calculate what will happen to Y* and...
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...
1. (26 marks total) Math Review: Recall the IS-L.M model from your intermediate macro course In particular, the goods-market equilibrium condition was Y-C(Y-T)+I (r) +G, and the money-market ecluilibrunn 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, bit less than one-for-one...
please help me Consider the following numerical example of the IS-LM model: C = 100 + 0.3YD I = 150 + 0.2Y - 1000i T = 100 G = 200 i = .01 (M/P)s = 1200 (M/P)d = 2Y - 4000i Find the equation for aggregate demand (Y). Derive the IS relation. Derive the LM relation if the central bank sets an interest rate of 1%. Solve for the equilibrium values of output, interest rate, C and I. Expansionary monetary...