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

Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
You decide to start a business that provides computer consulting advice for students in ur residence hall. what would be an example of an implicit cost you would incur in oper
In the nation of Wiknam, people hold $1,000 of currency and $4,000 of demand deposits in the only bank, Wikbank. The reserve–deposit ratio is 0.25. What are the money supply,
The number of taxicabs in Motorville and the taxicab fares are regulated. The fare currently charged is $5 a ride. Motorville taxicab drivers want to obtain government's per
For this assignment, you are required to research data related to an economic issue or situation relevant to your organization or a business organization in general. Use the B
Assuming no change in demand, will the Fed need to increase or decrease the supply of Federal funds? By how much will the quantity of Federal funds have to change for the eq
Each employer faces competitive weekly wages of $2,000 for blacks and $2,700 for whites. Suppose employers undervalue the efforts/skills of blacks in the production process. I
The fact that since 1973 blacks have never had a lower unemployment rate than Hispanics, who in turn have never had a lower unemployment rate than whites is evidence of a fair
Suppose that the current yield for a 20-year Treasury bond falls below the current one-year bond yield. Which of the following is true regarding the segmented markets theory o