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Consider the AD/AS model built from the IS/LM. The economy was operating at full employment, but it is suddenly hit by a negative demand shock in the form of a decrease in planned investment at each level of the real interest rate.
a. Show the impact of the negative demand shock in the Keynesian cross diagram and in the IS/LM graph.
b. Show what will happen in the Keynesian cross diagram and in the IS/LM graph if the government decides to increase spending in order to contrast the negative demand shock. Assume that the increase in government spending successfully bring output back to the full employment level.
c. Compare the initial full employment equilibrium (before the negative demand shock) with the new long run equilibrium after the government policy intervention. Is the level of investment different? Is the level of consumption different?
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q.in comparing a perfectly competitive market and a monopoly please answer each of the following questions thoroughly
q1. the country of numidia does not trade with any other country. its gdp is 20 billion. its government collects 4
The demand for good x1 is given by: (m/p1) - (p1/p2), where p1=1, p2=1, and m=10.Which of the following accurately describes the INCOME elasticity of demand?
How does definition of a market, or for that matter, a business strategy, affect that perception of a monopoly.
What would be implied by a positive price elasticity of demand?
Which of the following would occur if the federal government decided to use a budget surplus to reduce the existing debt.
The Acme Paper Company lowers its price of envelopes (1,000 count) from $6 to $5.40. If its sales increase by 20 percent following the price decrease, what is the elasticity coefficient?
Assume that the wholesale skim milk market is perfectly competitive. Suppose demand is described by P=5.10-0.80Q and supply is described by P=1.90+0.20Q. If there are no price controls, what would be the equilibrium quantity?
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