1 a suppose velocity is stable what would the federal

Reference no: EM13375357

1. a. Suppose velocity is stable. What would the Federal Reserve need to know in order to keep output at its natural level following a supply shock?

b. Assume that velocity is unstable and unpredictable. How would this complicate the Federal Reserve's ability to stabilize the economy following a supply shock.

c. Suppose OPEC suddenly collapsed and oil prices plummeted. Indicate what would happen to the short run aggregate supply and aggregate demand curves, output, and the aggregate price level in the short run

2. Consider the following model of the economy:

C = 170 + 0.6(Y - T)

I = 250

G = 300

T = 200

a. What is the value of the marginal propensity to consume?

b. Calculate the equilibrium level of GDP

c. What is the value of the government purchase multiplier?

d. Use your answer to Part d to calculate the amount by which government purchases of goods and services would have to rise in order to increase the equilibrium level of GDP by 50

Reference no: EM13375357

Questions Cloud

You have just inherited 100000 from your rich uncle sam : you have just inherited 100000 from your rich uncle sam. being the conservative sort you rush to your local bank and

Directions answer all five questions please submit your : directions answer all five questions. please submit your work in word or pdf formats only. you can submit an excel file

1 suppose that the following equations describe an economy : 1. suppose that the following equations describe an economy c i g t and y are measured in billions of dollars and r is

Just about everyone agrees that there is a legitimate and : just about everyone agrees that there is a legitimate and important role for government in business. where the

1 a suppose velocity is stable what would the federal : 1. a. suppose velocity is stable. what would the federal reserve need to know in order to keep output at its natural

1nbspnbspnbspnbspnbsp production possibility frontiers : 1.nbspnbspnbspnbspnbsp production possibility frontiers studying or socializing?nbspa. nbspdraw a production

Many critics however contend that the american recovery and : many critics however contend that the american recovery and reinvestment act of 2009 were not effective at all except

Integrating case 5-23balance sheetassetscash 15000accounts : integrating case 5-23balance sheetassetscash 15000accounts receivable net einventory dprepaid expenses and other

Suppose that this years money supply is 50 billion nominal : suppose that this years money supply is 50 billion nominal gdp is 1 trillion and real gdp is 500 billion.a. what is the

User Account

All Pages