+1-415-670-9189
info@expertsmind.com
Is the economy in its long-term equilibrium
Course:- Business Economics
Reference No.:- EM13891973




Assignment Help
Assignment Help >> Business Economics

Suppose the parameters of the IS curve are a ¯i = 0, b ¯ = 0.5, r ¯ = 3% and the real interest rate is initially R = 3%

(a) Is the economy in its long-term equilibrium? Explain.

(b) Suppose the real interest rate falls to 2 per- cent; what happens to the short-run equilib- rium, holding everything else constant?

(c) What happens to the short-run equilibrium if a ¯g falls 3 percent, holding everything else constant?

(d) What occurs if the marginal product of cap- ital rises to 5%? What would cause this to happen?




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
If the economy is operating at a point less than full employment (as it is now), what would we want to see happen to GDP? For right now, let's just look at the C (consumption)
A firm has $2.5 million in sales, a Lerner index of 0.67, and a marginal cost of $50, and competes against 800 other firms in its relevant market. What price does this firm ch
The cost of a water jet machine to be used for slicing cheese is $45,640. The machine will generate net annual income of $10,000 during its useful life of 7 years. Determine t
Smith, Ricardo, Malthus, and Marx had strikingly different views of the long-run tendencies of the capitalist system. Carefully discuss the vision of the future development of
Explain if the increase in demand results from a large purchase b the Chinese of a new American-made airplane or a large purchase by Americans of new lower priced Chinese-ma
Why might an accounting-based control system provide headquarters management with biased information about the performance of a foreign subsidiary? How can these biases best b
A monopoly with a constant marginal cost m has a profit maximizing price of p1. It faces a constant elasticity demand curve with elasticity e. After the government applies a s
Regarding alternate backup sites, which of the following is a low-cost site? Capital budgeting projects with which of the following net present values (in millions) would be s