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A) Explain in words how and why the income sensitivity of the demand for real balances affect the slope of the LM curve. Think of the demand for real balances as L(r,Y)= eY-fr where e and f are positive constants.
B) What are the effects of a large spending multiplayer on the slope of the IS curve? Graphically show and verbally explain.
C) Graphically show the effects of an increase in government spending on output in the IS-LM model. Verbally explain (including a discussion of the movement from the old equilibrium to the new equilibrium; what is true at the disequilibrium?) Assume a closed economy so that Y= C+I+G. Does output increase by the same amount as in the simple Keynesian cross model? Why does it differ?
D) Seperately describe points that are below and above the IS curve.
Explain what effect an expansionary fiscal policy would have on the price level and real GDP starting from full employment equilibrium.
consider the following demand schedule for movie ticketsprice nbsp nbsp nbsp nbsp nbspnbsp quantity demanded
Suppose that a business has developed a very high-quality product and operates more efficiently in producing that product than any other potential competitor.
In addition, pi* is the central bank's target level of inflation , and b is some positive parameter. This rule states that the central bank raises the real interest rate above its long-run level when inflation is above its target and lower when it..
Assume the Federal Reserve Board is undertaking anexpansionary monetary policy. Explain the detailsof how the expansionary Fed impacts each of the following:
What is the new deficit? Explain carefully why the deficit is not zero. c. Suppose the F-L amendment was not in effect and planned investment falls to I = 55.What is the new value of GDP?
Ellucidate what happens to the price of a bond that pays a fixed percent of the face value every year when interest rates in the economy increase.
In the short run a firms cost of producing the hundreth unit of output is $10,000. If it makes just one more its $10,150. What is the marginal cost and average total for 101 units. Also average cost for 100 units?
Edith agreed that in case of traffic jams, Shea Boulevard was a reasonable alternative.Neither of them knows the state of the highway ahead of time.
Elucidate how these economic concepts can be used to address the firm's problems and opportunities.
problem 1 using assignment 3s production for joes pizzeria we have the following table. assume the wage rate for labor
What is the comparison and contrast of the "life cycle" hypothesis and "permanent income" hypothesis and their respective implications for inequality in the income distribution?
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