Dynamic as-ad diagram

Assignment Help Macroeconomics
Reference no: EM131095253

Suppose that an economy has a natural growth rate of 2%. Moreover, the central bank in the country has perfect control over the money supply and increases it by 4% every year. Assume spending is such that the velocity of money is constant over time and that the economy is currently at its long-run equilibrium.

a. Draw a clearly labeled dynamic AS-AD diagram that shows the long-run equilibrium point, as well as the economy's current growth rate of real GDP, inflation, and expected inflation. Label this point E0. Be sure to include both the short-run and long-run aggregate supply curves.

Reference no: EM131095253

Questions Cloud

Income elasticity of demand for the good : Again when the income rises by 5 percent, the units consumed of the commodity increase from 100 to 110. What is the income elasticity of demand for the good?
Write a particular specification for a cut-to-fill earthwork : Note that the project specification will include a geotechnical report and a series of drawings giving all dimensions, slopes, etc.
Compute the revenue earned by the firm : The demand function for a good is given as: Q=10 - 2P, where Q= quantity demanded and P=market price/unit of the good. If Q=6 in equilibrium, compute the revenue earned by the firm.
Relationship between income growth and happiness : Why did is the relationship between income growth and happiness different in the two sets of countries? It could be because the Latin American countries are on average poorer than the more advanced economies, or because they are much more unequal.
Dynamic as-ad diagram : Draw a clearly labeled dynamic AS-AD diagram that shows the long-run equilibrium point, as well as the economy's current growth rate of real GDP, inflation, and expected inflation. Label this point E0. Be sure to include both the short-run and lon..
Globalized world of marketing : Finding a billboard or an advertisement banner on roads, railway stations and other public places had been observed for many decades and it is still the most successful mode adopted by most companies throughout the world.
What kind of salesperson is a manufacturer''s agent : If you were a large (over/under $ 1 million) lottery or sweepstakes winner, how would you determine whether you would want the sweepstakes prize today or over ten years if you could earn only 6 percent interest on the investments?
Internet presence improve information problems : How might a company's internet presence improve information problems? Can a company's internet presence worsen information problems? Give an example of a company that has an internet presence.
What would be needed in order for the general public : What would be needed in order for the general public to understand this information and become involved in the policy-making process?

Reviews

Write a Review

Macroeconomics Questions & Answers

  Compute producer surplus surplus and profit in this case

Compute producer surplus, how much is the difference between the producer surplus and profit in this case

  Illustrate what is your opinion- observation

Illustrate what is your opinion, observation, or recommendation on this company. what are their shortfalls, how do they relate to other in the industry.

  What nominal interest rate per year is equivalent to an

What nominal interest rate per year is equivalent to aneffective 15% per year, compounded semiannually?

  Research federal government spending and taxes

Research federal government spending and taxes over the last 3-5 years (fiscal policy). Has total government spending increased or decreased? Explain. Have income tax rates increased or decreased? Explain.

  U.s. labor markets if immigration is not controlled

Immigration is a major topic of concern in today's economy. What are the possible problems and solutions for these concerns? What could happen to the U.S. labor markets if immigration is not controlled?

  Is fed controlled by congress or executive branch of govt.

Is the Fed controlled by Congress or the executive branch of the government? What are the three tools the Fed has available to influence the economy? What can it do today to get the economy to recover?

  What is a store of value what types of assets act as a store

What is a store of value? What types of assets act as a store of value?

  How labor supply function is positively related to real wage

A sharp decrease in housing prices makes people much less wealthy. If the primary effect of this decreased wealth is felt on labor supply, what happens to the level of employment and the real wage rate if the labor supply function is positively re..

  Intellectual property rights

What are intellectual property rights, and how do the rules governing them (such as those in the World Trade Organization) affect spending by households and government?

  Webs of independence to organizational systems

Relate the concept of "webs of independence" to organizational systems. Write a 150 words about how you going to handle that concept when you were a CEO.

  Which economics principles governs the situation

Provide an example of economic forces at work. Does this issue affect individual consumers or firms or the economy as a whole?

  Elucidate why relatively flat as opposite relatively steep

Elucidate why relatively flat as opposite relatively steep labor demand curves are more consistent.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd