Determine the price level of graph, Econometrics

Suppose that the aggregate demand curve in a particular year is given by the algebraic

          expression:  Y = 3000 + 1000/P, where Y is the aggregate output and P is the price level as given by the GDP Deflator.  Potential GDP (Y*) = 4000.

a.  Plot aggregate demand and long run aggregate supply curves. Show aggregate demand schedule.

b.  Suppose that the prices are flexible.  Determine the price level and show it on the graph.

c.  Now suppose that the following year, the aggregate demand curve is given by:

Y = 3000 + 1100/P.  In what direction has the aggragate demand curve shifted? If  the aggregate output remains at the potential level, determine the new price level.  Calculate the rate of inflation between the two years.

 

 

 

Posted Date: 3/12/2013 5:20:59 AM | Location : United States







Related Discussions:- Determine the price level of graph, Assignment Help, Ask Question on Determine the price level of graph, Get Answer, Expert's Help, Determine the price level of graph Discussions

Write discussion on Determine the price level of graph
Your posts are moderated
Related Questions
suppose only one professor teaches economics at your university, would you say that this prof is a monopolist who can exact any price from students in the form of readings assigned

reasons of lags

if there is no autocorrelation what will be done

what factors dertemine underemployment/overemployment

Probelm: (a) Differentiate between homoscedasticity and heteroscedasticity. (b) Outline the reasons why the variances of disturbance term may vary. (c) Given the 3 observ

what factors affect the choice of material handling systems

In a simple economy, people consume only 2 goods, food and clothing. The market basket of goods used to compute the CPI has 50 units of food and 10 units of clothing.

analyze the trend of time series using semi-average method, method of least square regression and moving average method

economic system

what are the test for heteroscedasticity?