Compute the equilibrium level as-ad model, Macroeconomics

1. Use the AS/AD model to

a. Demonstrate graphically and explain verbally the situation the US economy is currently in.

b. In the diagram you drew for part (a) above, show the impact the Obama administration stimulus package is designed to have on the economy.

c. Discuss how knowing the exact value of potential income/output will impact your answers to (a) and (b) above. NOTE: You do not need to draw any more diagrams here.

2. Consider an economy characterized by the following AE equation: AE = 4000 + 0.8Y.

a. Compute the equilibrium level of Y and illustrate the equilibrium in an AE/AP diagram.

b. Suppose autonomous investment increased by 300. Illustrate the impact of this change in the diagram you drew for part (a) above. NOTE: Be sure to compute the new equilibrium level of Y and include it in your diagram.

c. Correctly link up your diagram for (a) and (b) above to an AS/AD diagram. Be sure to completely label your AS/AD diagram.

 

 

 

 

 

Posted Date: 3/1/2013 7:39:14 AM | Location : United States







Related Discussions:- Compute the equilibrium level as-ad model, Assignment Help, Ask Question on Compute the equilibrium level as-ad model, Get Answer, Expert's Help, Compute the equilibrium level as-ad model Discussions

Write discussion on Compute the equilibrium level as-ad model
Your posts are moderated
Related Questions
Q. Explain the basic characteristics of IS-curve? IS-LM diagram IS-curve The IS curve shows all combinations of R and Y where the goods marketis in

You are the manager of a firm that receives revenues of $50,000 per year from product X and $80,000 per year from product Y. The own price elasticity of demand for product X is -3,

Potatoes cost Janice $1 per pound, and she has $5.00 that she could possibly spend on potatoes or other items. If she feels that the first pound of potatoes is worth $1.50, the sec

Would it be more efficient if more firms could produce Vista? Would Microsoft have spent the money to develop Vista if it didn't hold a patent--that is, if once it developed Vista,

The real interest rate Interest rates and inflation Suppose you have 1 million on 1st January 2008. A basket of goods and services similar to the CPI basket costs 100,000.

Jen spends all her income on shortbread cookies (S) and cupcakes (C). Her utility function is given by: U(S,C) = S +2C. Suppose that Jen has an income of $10 and that a cupcake cos

Using the Mundell-Fleming model, describe how an increase in a country’s risk premium on the world interest rate can result in a higher level of real income. Under what circumstanc

A manager at a local bank analyzed the relationship between monthly salary and three independent variables: length of service (measured in months), gender (0 = female, 1 = male) an

Illustrate the three approaches of measuring national income? Show that these three approaches give identical result. Explain private saving. How is the private saving used

One unit of A is made up of one unit of B and one unit of C. B is made of three units of D and one unit if F. C is composed of three units of B, one unit of D, and four units of E.