+1-415-670-9189
info@expertsmind.com
Solve for the money market equilibrium
Course:- Business Economics
Reference No.:- EM13795702




Assignment Help
Assignment Help >> Business Economics

Consider a closed economy which can be characterized by the following equations: C = 400 + 0.8YD I = 600 + 0.1y- 1000r G = 300 T = 125 (M/P)d = 0.2Y-6000r (M/P)= 400 a. Solve for the goods market equilibrium and state the equation for the AD and IScurve. Draw both graphics. b. Solve for the money market equilibrium and LM and draw the graphics. c. Determine the equilibrium values for real GDP (Y), the real interest rate (r), private consumption(C), investment (I) and private saving (S). Show that in equilibrium total saving equals investments. Graphics d. Suppose that government uses contractionary fiscal policy and decreases government expenditures to G = 200. What happens to the equilibrium? (Repeat exercise (c) for the new government expenditures. Graphics. e. The Central Bank increases the money supply to 500. How this policy affects the final equilibrium? What is the new level of output and interest rate? Use graphics and explain




Put your comment
 
Minimize


Ask Question & Get Answers from Experts
Browse some more (Business Economics) Materials
Draw a pair of utility curves, one for X and one for Y, and label the positions immediately after the innovation (before any migration) as x for city X and y for city Y. Use a
Suppose you have hired a new worker, unfortunately you do not know if the worker is a shirker or a hard worker. Suppose working hard raises the probability of making a sale fr
Your company is bidding on a system design project. It is your job to design the system architecture. How will you balance the need for scalability against the need to keep co
A 50-kilowatt gas turbine has an investment cost of S40,000. It costs another S17,000 for shipping, insurance, site preparation, fuel lines, and fuel storage tanks. The operat
If the tax elasticity of labor supply were 0.19, by how much would the quantity of labor supplied increase among people in the top U.S. tax bracket if the highest marginal tax
Classical Investment theory believes that’s investment depends on real GDP and real investment rate. You are estimating an investment model based on theory as: I= B0+B1+B2r+U
Write down an individual’s optimization problem regarding consumption of good and bad behaviors using the Bellman equation representation of lifetime utility (as we did in cla
Suppose that the current price of oil is $60 per barrel and the quantity sold is 90 million barrels per day. The current estimates of the price elasticity of supply and demand