Reference no: EM13851728
Consider the following IS-LM model:
C = 200 + 0.25YD
= 150 + 0.25Y - 1000i
G = 250
T = 200
(M/P)d = 2Y - 8000i
M/P = 1600
a) Derive the IS relation. (Hint: you want an equation with Y on the left side and everything else on the right)
b) Derive the LM relation. (Hint: it will be convenient for later use to rewrite this equation with i on the left side and everything else on the right)
c) Solve the equilibrium for real output. (Hint: Substitute the expression for the interest rate given by the LM equation into the IS equation and solve for output)
d) Solve the equilibrium interest rate. (Hint: Substitute the value you've obtained for your Y in part (c) into either the IS or LM equations and solve for i . If your algebra is correct you should get the same answers in both equations.)
e) Solve for the equilibrium values of C and I, and verify the value you obtained for Y by adding C, I, and G
f) Now suppose that the money supply increases to M/P = 1840. Solve for Y, i, c and T, and describe in words the effects of an expansionary monetary policy.
g) Set M/P equal to its initial value of 1600. Now suppose that government spending increases to G = 400. Summarize the effects of an expansionary fiscal policy on Y, i, and C.
|
Change in the amount of money transferred
: Why a change in the way government might makes transfers to the poor change the poverty rate even if there is no change in the amount of money transferred?
|
|
The application of current us antitrust law
: The application of current US antitrust law
|
|
An entity-relationship diagram for a database
: an Entity-Relationship diagram for a database
|
|
Consideration when seeking an efficient allocation
: On the three issues that economics suggests are worth discussing or consideration when seeking an efficient allocation. Discuss these against the backdrop of the ensuing principles or themes that emanate from them as well as how these relate to the s..
|
|
Solve equilibrium interest rate-equilibrium for real output
: Derive the IS relation. Solve the equilibrium for real output. Solve the equilibrium interest rate. Now suppose that the money supply increases to M/P = 1840. Solve for Y, i, c and T, and describe in words the effects of an expansionary monetary poli..
|
|
Analyze the benefits of using neural networks
: Assignment: Prepare a response to the following discussion topic: Analyze the benefits of using neural networks, fuzzy logic, and intelligent agents in a business setting
|
|
Economists descriptive statements-propositions-predictions
: Should one distinguish between economist’s descriptive statements, propositions, and predictions about the world, and their statements about what policies should be adopted?
|
|
Write a static method named showtwos
: Write a static method named showTwos
|
|
What is the total amount of interest anthony
: Anthony is considering the purchase of used car. The price, including the title and taxes, is $9,530. Anthony is able to make a $2,530 down payment. The balance, $7,000, will be borrowed from the Credit Union at an interest rate of 9.25% compounded d..
|