Calculate a change in the mix of monetary and fiscal policy

Assignment Help Business Economics

Reference no: EM13802651

Y= C+I +G +X

C= 220 + 0.63Y

I= 400 - 2000R + 0.1Y

M=(0.1583Y - 1,000R)P

X= 600 - 0.1Y - 100 EP/Pw

EP/Pw = 0.75 + 5R

G=1,200 and the money supply M=900. Suppose that the ROW price level Pw is always =1.0 and the US price level is predetermined at 1.0

A) Calculate a change in the mix of monetary and fiscal policy that leaves output equal to the level it is when M=900 and G=1,200 but in which the interest rate is 3% rather than 5%. Describe what happens to the value of the dollar, net exports, the government budget deficit, and investment for this change in policy.

Reference no: EM13802651

Questions Cloud

An unregulated natural monopoly can lead : An unregulated natural monopoly can lead to all of the following except

Factors shift the demand curve : Which of the following factors shift the demand curve?

Why do price gouging laws often fail to work : Why do price gouging laws often fail to work?

Existing box and a new box location : 1. If you measure 20 feet between an existing box and a new box location, you should cut a piece of cable with a length of approximately

Calculate a change in the mix of monetary and fiscal policy : Calculate a change in the mix of monetary and fiscal policy that leaves output equal to the level it is when M=900 and G=1,200 but in which the interest rate is 3% rather than 5%. Describe what happens to the value of the dollar, net exports, the gov..

Determine the sensitivity of net exports to interest rate : What factors determine the sensitivity of net exports to the interest rate? Consider the cases where net exports are very sensitive to the interest rate and where they are very insensitive. Compare the effect that an increase in the money supply has ..

Write a paper about how genz if effected by global warming : Write a paper about how genZ if effected by global warming.

Federal funds rate target on several different occasions : In the fall of 2002 the Fed voted to decrease the federal funds rate target on several different occasions, reducing it from 3% to 1.75%. What action in the "open market" would the Fed's trader have had to take, other things equal, in order to induce..

Legal and ethical issues in healthcare : Legal and Ethical Issues in Healthcare

User Account

All Pages