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
My question is that when we use Impulse response function and how to use it. Is it used along with some other methodology. What is the meaning of graphs of IRF?

PrivateJets (PJ) is considering expanding its operations in the corporate travel market. Currently, PJ has a capital structure with a 25% debt-equity ratio. Their levered equity

demand for tea, Y, are assumed to be affected by income of students, X. A simple linear regres-sion analysis was performed on 20 observations and the results were: Independent vari

(a) Describe all tests that you need to undertake prior to working with time series data. (b) Consider the following regression result: Standard Errors: (6.7525)

Define McKinsey & Company's present "core competence" in terms used by Hamel & Prahalad and state how it fits with McKinsey's longer term vision. Answer) McKinsey an


what are factors contributing to the long run trend interms of trade of developing countries?

please provide literature on vecm granger causality block exogenity wald test and also tell how to interpret results