Reference no: EM131164174
Recall the following equations which describe an ISLM economy: C(YT)= C1+b*(YT) I(r) = I1 d*r G = G1 , T = T 1 Md= L1+e*Yf*r r e a l M s = MP Suppose the economy is described by the following equations: C(Y −T)=40+0.7*(Y −T) I(r) = 300 − 30r G = T = 150 ? Md = 0.3Y − 5r real Ms = 50 ?P Sob=0.7,d=30,e=0.3,f=5, andL1=0. Note that we now use the real money supply, or real money balances, which is the nominal money supply divided by the price level. These equations give the following IS and LM curves: IS: r = 9.5 − 1 Y 100 LM: r=0.06Y −10 P
1. What is the marginal propensity to save?
2. If p = 10, use IS and LM to find equilibrium GDP, then find equilibrium consumption and investment.
3. Describe one scenario in which autonomous investment could change.
4. Derive the AD curve. Do this by solving for price.
5. Which assumption do economists make which results in a vertical AS curve?
6. Which assumption do economists make which results in an upwardsloped AS curve? Describe one reason why this assumption might be true in the real world.
7. Draw the IS, LM, and AD curves described above. Include an upwardsloped AS curve. Be sure to label equilibrium Y and r with their exact values. Don’t worry about finding the exact value of p.
8. Name one exogenous and one endogenous variable in the ISLMADAS model.
9. Recall your drawing for question #10. Now draw what happens when government spending increases by 10 (i.e., draw the proper curve shifts). Label the exact numerical change in equilibrium GDP. Use the following government spending multiplier:
MGIS−LM =
1/(1−b+ de f )
|
How mintzberg 5 ps are still relevant
: How Mintzberg 5 Ps are still relevant in today's time. Give suitable example to elaborate your answer.
|
|
Has your original topic and approach changed
: Consider what role this course has played in helping you determine an approach to your dissertation topic. Has your original topic and approach changed? Why? How?
|
|
Suitable for existing and future users
: Analyse the content, format and language style of the notes. Assess whether, in your view, the notes are suitable for existing and future users. Explain your reasoning.
|
|
Treated differently than other commodities
: Week 4 Graded Assignment -Prepare the text of a talk which you will give to this audience, which considers whether or not health care services and products should be treated differently than other commodities and provide a basis for your viewpoint.
|
|
What is the marginal propensity to save
: Recall the following equations which describe an ISLM economy: C(YT)= C1+b*(YT) I(r) = I1 d*r G = G1 , T = T 1 Md= L1+e*Yf*r r e a l M s = MP Suppose the economy is described by the following equations: C(Y −T)=40+0.7*(Y −T) I(r) = 300 − 30r G ..
|
|
Related to long-term financing methods
: Goal: The goal for this assignment is to select the topic for your research paper that is related to long-term financing methods. Format Requirements: The work is to be clear and concise, and students will lose points for improper grammar, punctu..
|
|
Compute the current ratio and inventory turnover
: Compute the Current ratio, Inventory turnover, Receivables turnover, Book value per share, Earnings per share, Debt to total assets, Profit margin on sales and Return on common stock equity.
|
|
Determining the provisions of the sarbanes-oxley act
: How does the decision in this case impact the validity of the Board and other provisions of the Sarbanes-Oxley Act?
|
|
Government can take advantage of the power of the multiplier
: Government can take advantage of the power of the multiplier and can help reduce the unemployment rate by increasing Government Expenditures on goods and services or by reducing taxes. Can you suggest any other ways that the Government can spend mone..
|