Compute the equilibrium level as-ad model, Macroeconomics

Assignment Help:

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.

 

 

 

 

 


Related Discussions:- Compute the equilibrium level as-ad model

Stock of a particular company, Suppose that you have bought a total of 3100...

Suppose that you have bought a total of 3100 shares of stock of a particular company. You bought 1200 shares of stock at $17 per share, 900 shares of stock at $11 per share, and th

Calculate the desired capital stock, Suppose that the desired capital stock...

Suppose that the desired capital stock is given as: K* = 0.3Y/i r Where Y = GDP, and i r is the real interest rate.  Suppose further that Y = $5 trillion and that i r

Relationship between oil prices and economic, It was observed that followin...

It was observed that following a one standard deviation shock to the price of oil, interest rates rose sharply immediately afterwards reaching a maximum after two quarters. Then fr

Game Theory, A, Explain how a person can be free to choose but his or her c...

A, Explain how a person can be free to choose but his or her choices are casually determined by past event 2 B , Draw the casual tree for newcomb''s problem when Eve can''t perfe

Demand for a product, 1. Suppose the demand for a product is given by QD = ...

1. Suppose the demand for a product is given by QD = 2000 - 25P. a) Calculate the Price Elasticity of Demand when the price is $30. b) What price should the firm charge if it

How to calculate rate of interest, Assume a sudden collapse in the stock ex...

Assume a sudden collapse in the stock exchange of an economy is expected to reduce the future profitability of the firms of the economy. Construct loanable funds market in a c

EXCHANGE RATES, WHAT IS THE BEST EXCHANGE RATE TYPE

WHAT IS THE BEST EXCHANGE RATE TYPE

Classical model, using a graph of the classical labour market, illustrate t...

using a graph of the classical labour market, illustrate the effects of a real wage existing in the market that is lower than the equilibruim real wage.what will eventually happen

How does outsourcing affect the economy, In principle, outsourcing makes th...

In principle, outsourcing makes things a little inexpensive and enhance profitability. Though, some things require to be done 'in house'. For example, some employers (largely) outs

Agency decides to hire operators, An agency is having problems with persona...

An agency is having problems with personal phone calls made during working hours. Each minute of a personal call costs the agency $0.50 in wasted wages. The agency decides to hire

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd