Reference no: EM131284205
Consider an economy described by the following:
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C
|
=
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3 trillion
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mpc
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=
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0.8
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|
I
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=
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1.3 trillion
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d
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=
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0.3
|
|
G
|
equals=
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3.5 trillion
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x
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=
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0.1
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|
T
|
equals=
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3 trillion
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lambdaλ
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=
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1.5
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|
NX
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equals=
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-0.5 trillion
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r
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=
|
1
|
|
f
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=
|
1
|
|
|
|
1. The expression for the MP curve is
2. The expression for the AD curve is:
3. Assume that π=1.5%. The real interest rate r is __%.
4. The equilibrium level of output is?
5. Consumption is ?
6. Investment is?
7. Net exports are?
8. Suppose the Fed increases r to r=2.5. The real interest rate is ?
9. The equilibrium level of output is?
10. Consumption is?
11. Planned investment is?
12. Net exports are ?
13. When the Fed increased r, output, consumption, planned investment, and net exports all decreased. The Fed increased r because it thinks the economy will (weaken/strengthen) in the future, or there is a risk that inflation will (fall/rise) fallrise in the future.
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What is the purpose of your presentation
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