ZuoTi.Pro
Question

Use the IS/LM/PC model diagram to illustrate how a reduction in the oil price might affect...

Use the IS/LM/PC model diagram to illustrate how a reduction in the oil price might affect the economy in the short and medium term. For simplicity assume that the economy was initially in equilibrium.

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

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
Use the IS/LM/PC model diagram to illustrate how a reduction in the oil price might affect...
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

  • 1. Use the IS-LM model to show how an unexpected inflation could result in a higher...

    1. Use the IS-LM model to show how an unexpected inflation could result in a higher short-run GDP. 2. Use the IS-LM model to show how an expected inflation could result in a higher short-run GDP. Explain using an IS-LM diagram. Make sure you explain in words what happens in your diagram. 3) Suppose a closed economy is initially in the long run equilibrium. Suppose the monetary base of this economy is $100 million, of which people carry $10 million...

  • Use the IS-LM-PC model with an inflation-targeting central bank to answer the following short answer questions....

    Use the IS-LM-PC model with an inflation-targeting central bank to answer the following short answer questions. In this question, you don’t need to explain or show the graph. But, when you’re not sure of the answer, don’t guess; instead, use the IS-LM-PC model to help you. An increase in the risk premium. Inflationary expectations are adaptive. i. What happens to inflation over time? ii. What does the central bank need to do to return to the medium-run equilibrium?

  • B3. Open Economy IS-LM-FE model: The behaviour of households and firms in an open 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...

  • Contractionary Monetary Policy: A) Using the exchange rate market model, illustrate and explain how the monetary...

    Contractionary Monetary Policy: A) Using the exchange rate market model, illustrate and explain how the monetary policy action identified above may affect the exchange rate. Identify the new equilibrium on the diagram as point B. B) Using the IS-LM model, illustrate and explain how the economy and the unemployment rate may be impacted as a result of the change in the exchange rate in part a. Identify the new equilibrium on the diagram as point B.

  • 1. Use the IS-LM model to illustrate the short run impact of this change in money...

    1. Use the IS-LM model to illustrate the short run impact of this change in money supply on the equilibrium level of GDP and interest rate. Use a diagram and also explain in words. Make sure you show which curve shifts, and in which direction. 2. Assuming the fiscal and monetary policymakers do not do anything, what will be the long run level of GDP and interest rate? Use the same diagram you already drew to answer question 1. Make...

  • Using the urban model, illustrate and explain how a reduction in population and a reduction in...

    Using the urban model, illustrate and explain how a reduction in population and a reduction in land rent will affect city size and structure.

  • 1. (The IS-LM-PC model): Assume the following relations characterize the goods market: (i) 1128 +...

    1. (The IS-LM-PC model): Assume the following relations characterize the goods market: (i) 1128 +0.2Y 300(rt + xt) (iii)G,-215 :T t = 200 (iv)st= 0.15 or 15% e) Derive the IS curve (as a relation between Y and r). (b) Assume the LM curve is given by r 0.16 (ie. in period t, the central bank sets the real interest rate at 16%). What is the short-run equilibrium level of output (Yt )? (c) Suppose that L = 2000 and...

  • Consider our medium-run model of the economy: Y =C(Y-T)+I(Y,r+x)+G (IS) r=r (LM) TIt - Ilt-1 =...

    Consider our medium-run model of the economy: Y =C(Y-T)+I(Y,r+x)+G (IS) r=r (LM) TIt - Ilt-1 = -a(ut – Un) (PC) Suppose the economy starts at a point such that ut = Un and r = rn. Graph the effects of a financial shock that increases the risk premium, x. What happens to output, the interest rate, and inflation in the short-run? What happens in the medium-run? What mechanism causes the transition from the short-run equilibrium to the medium-run equilibrium?

  • 1. Use the IS-LM model to show how an unexpected inflation could result in a higher...

    1. Use the IS-LM model to show how an unexpected inflation could result in a higher short-run GDP. 2. Use the IS-LM model to show how an expected inflation could result in a higher short-run GDP. Explain using an IS-LM diagram. Make sure you explain in words what happens in your diagram.

  • Question 4 Discuss the following statements: (a) According to the IS-LM model how would an increase...

    Question 4 Discuss the following statements: (a) According to the IS-LM model how would an increase of government spending affect equilibrium interest rates and income in a short-run closed macroeconomy. (b) According to the Classical Model of the aggregate economy, changes in aggregate demand have no effect on the amount of output produced, only the average pricelevel may be affected. (c) Crowding out through interest rates occurs when expansionary fiscal pol-icy causes interest rates to fall. (d) The relative bargaining...

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