Find the expression for the aggregate demand curve

Assignment Help Business Economics

Reference no: EM131389333

Assume a closed economy described by the following equations: C = 300 + 0.6(Y-T) ; I = 500 - 40R; G = 200; T = 200; M = 2800; (M/P)d = 4Y - 100R; SRAS: P = 1; LRAS: Y=1000

a) Find the government purchases multiplier and interpret it. b) Find the tax multiplier and interpret it. c) Find an expression for the IS curve. d) Find an expression for the LM curve. e) Find short run equilibrium level of output, prices, and real interest rate. f) Find the expression for the Aggregate Demand Curve (AD). g) Find the long run equilibrium level of output, prices, and interest rate. h) Suppose that the Congress decides to set government purchases at G = 400. I. Find the new short run equilibrium level of output and real interest rate. i) Using both the IS/LM and AD/AS model, graphically illustrate the SHORT and LONG run impact of the policy implemented on part h) on interest rate, output, unemployment, and price level. Assume that the economy was initially operating at the “natural level of employment”. No computations required.

Reference no: EM131389333

Questions Cloud

What should be the result with regard to the dye plant : Anthony and Karen own nothing but their interest in the partnership property.- What should be the result (a) with regard to the dye plant and (b) with regard to Leroy's home?

How business income would be taxed if the owners adopt : For each of the following separate cases, recommend a form of business organization. With each recommendation, explain how business income would be taxed if the owners adopt the form of organization recommended.

Outline and describe the basic configurations : Outline and describe the basic configurations, flows of products and information, and typical participants in marketing channels. Identify the three (3) most influential channel participants for the retailer that you selected.

What is the extent of muirs personal liability : What is the extent of Muir's personal liability and the personal liability of Jones and Ray as to the judgment obtained by Ware and the debt owing to XYZ Bank?

Find the expression for the aggregate demand curve : Find the government purchases multiplier and interpret it. Find the tax multiplier and interpret it. Find an expression for the IS curve. Find an expression for the LM curve. Find short run equilibrium level of output, prices, and real interest rate...

Describe the leaders contribution to the field of healthcare : Each year Time magazine publishes "The Most Influential People" in the nation - they are artists, icons, pioneers, and leaders in their respective fields. For more than 100 years, healthcare has eradicated diseases, promoted safer communities, and..

Explain which company is performing better : Interpret these ratios, and explain what they mean for Tootsie Roll Industries Inc., supporting your explanation with your calculations. Compare your company to the competition and explain which company is performing better.

Explain who is correct in given contention : Matthew contends that the distribution should be $40,000 to Lauren and $20,000 to Matthew. Susan claims the $60,000 should be divided equally among the partners. Who is correct? Explain.

Find short run equilibrium level of output and prices : Assume a closed economy described by the following equations: C = 300 + 0.6(Y-T) ; I = 500 - 40R; G = 200; T = 200; M = 2800; (M/P)d = 4Y - 100R; SRAS: P = 1; LRAS: Y=1000 e) Find short run equilibrium level of output, prices, and real interest rate.

User Account

All Pages