+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
The MC curve of a profit maximizing firm must increase and cuts its MR curve from above at the firm's maximum output. The MC curve of a profit maximizing firm lies below its M
Assume we are examining the market for luxury automobile in the USA. In separate graphs, graph what occurs when each of the following happens For each graph explain what is ha
What are the various causes/types of unemployment? What does it mean to be unemployed, i.e. what are the social, economic and political effects of unemployment? Should the gov
“Economic profits result whenever only a few large competitors are active in a given market.” Discuss this statement using an example for illustration. Response is due not lat
Once Bitten Corp. uses no debt. The weighted average cost of capital is 8.4 percent. If the current market value of the equity is $29 million and there are no taxes, what is E
What should be the marginal cost of a monopoly firm selling textbooks to students in a small town and is currently maximizing profit by charging a price of $48 a book and the
After listening to a recent sales presentation, Mary Smith signed up for membership at the local health club. On arriving at the facility, she learned there was an additional
A large wood products company is negotiating a contract to sell plywood overseas. The fixed cost that can be allocated to the production of plywood is $800,000 per month. For