How does the discovery of new technology affect the is curve

Reference no: EM132199098

Quesiton: Suppose the discovery of a new techonolgy increases the expected future marginal product of capital. Assume that current productivity is unaffected and FE line doesn't shift.

a. How does the discovery of new technology affect the IS curve

b. Use the classical IS-LM-FE model to determine the effects of the new technology on output, the real interest rate, and the price level (assume that expected future wages and future income are unaffected by the new technology)

c. How does the discovery of the new technology affect the AD curve?

d. Using the misperceptions theory, determine what happens to output and price level in the short-run effects of the new technology on current output and the price level (keep the expected price, Pe, fixed at its value before the discovery of the new technology)

Reference no: EM132199098

Questions Cloud

Write a function definition for an application takes : Write a function definition for an application takes a call by value stack as its only parameter.

What would happen to interest rates as a result : In the sluggish state of the economy from 2008-10, corporations became more pessimistic about undertaking greater investment projects, such as building.

The function will return the amount that the tip should be : Write a function that expects two parameters, one will be the amount of the dinner check(a float) and the other will be the percentage of tip expressed.

Determine the number of bits in a char : Write a function that performs a numerical experiment to determine the number of bits in a char, short, int, long, and long long variable type.

How does the discovery of new technology affect the is curve : Suppose the discovery of a new techonolgy increases the expected future marginal product of capital. Assume that current productivity is unaffected.

Medical variety with the observed price of the illegal weed : why it might be misleading to compare the observed price of the medical variety with the observed price of the illegal weed.

Legalization of presently illegal substances : Of what significance is the elasticity of demand for drugs in the debate about legalization of presently illegal substances?

Supporters of a higher minimum wage : Why do you think organized labor groups, such as unions, are supporters of a higher minimum wage

Incomes of low-wage workers without : Are there methods other than a minimum wage that could raise the incomes of low-wage workers without reducing employment of minority youngsters?

User Account

All Pages