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Demonstrate the effect of eacd

Assignment Help Macroeconomics
Reference no: EM132472861

1) Graphically demonstrate the effect of eacd of the following on either the short-run aggregate supply (SAS) curve or the aggregate demand (AD) curve. Be sure to label all axes.

A) Business expectations improvement

B) The Feburary 2007 stock market decline in China leads to decrease in wealth

C) There is an increase in nominal wage rate.

d) Oil prices decrease dramatically

E) Consumer confidence is falling

2) Most Economic analysts expect the bank of Canada to raise the interest rate (The bank rate) over the next few months. if this happens and economic agents respond as expected.

a) Explain what will happen to the amount of reserves, loans and deposits in chartered banks.

b) Use the appropriate graph to illustrate and explain what will happen to money supply curve and equilibrium interest in (a).

c) Use the AS-AD diagram to illustrate and explain what will happen to equilibrium GDP and the price level in (b).

d) Explain how the change in equilibrium interest rate in (b) is expected to affect the Canadian dollar exchange rate. How will the change in exchange rate affect exports of goods and services.

3) In an economy with no government and no foreign sectors, autonomous consumption is 250 billion, investment is 350 billion, and the marginal propensity to consume, or MPC, is 0.75.

a) Draw the aggregate expenditure (AE) curve and indicate the equilibrium value.

b) What are the slope and the vertical axis intercept if the AE curve?

c) Compute the multiplier

d) If investment rises to 450 billion what will be the new equilibrium real GDP?

E What is the effect of 30 increase in autonomous exports on equilibrium income

Reference no: EM132472861

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