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
QM2 Econometric Project As part of the course requirements you have to undertake an econometric evaluation of an economic issue using data that you have gathered either from the ho

A thick walled cylinder has internal and external diameters of 120 mm and 420 mm respectively. It is made from a ductile elastic material of your choice and is used to contain hot

What''s the relationship between economic efficiency and technical efficiency

Factor that affect the volume of production

Replicate the estimations in Table 2 on page 82 of Graddy (1995), but excluding the data of King Whiting.

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

Can you draw a line which starts from left to right has a positive slope?

You are considering a new line of consumer products. You expect revenues of $14 million in each of the next ten years, while expenses are half of revenues (all cash flows are assum

examples of economic relationships

verify Leibniz rule for differentiation under the integral sign for the following function 2x^2+3xy+3y^2