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Part 1: In class we built the IS-LM model using graphical representations. Below see if you can derive the formation of the model algebraically: C = 0.5(Y –T) T = 2000 I = 3,000 – 250r G = 3,000 Md/P = 0.5Y – 500r Ms/= 2,000 P=2 (a) Write a formula for the IS curve (Y as a function of r alone). Remember IS is based on demand. (b) Write a formula for the LM curve (Y as a function of r alone). Remember LM is based on money market equilibriums. Hint: substitute out M/P. (c) Sketch and label the two curves on a graph (d) What is the short run equilibrium values of Y, r and national savings? Part 2: (a) Using the same information from Question 1, what is the government expenditure multiplier? (b) Based on the multiplier found in (a) how much would GDP increase buy if government spending increases by 1,500 (ignore money demand effects (no change in r)). (c) Use the IS-LM model from question 1, how much is the short run equilibrium if Government spending increases by 1,500 (consider money demand effects)? Sketch a graph of these results. (d) What monetary policy could be implemented in order for the government stimulus to have its full multiplier effect (don’t have to give a numerical answer just a policy)? (hint: think of what you would want to do with the LM curve)
Discuss the importance of the command process and the traditional process in the making of management decisions. Illustrate specific ways in which managers must take these two processes into account.
What is dual cut off method of the multidimensional poverty index? Based on the three case studies of ' portfolio of the poor' (2009) did you find any poor of Bangladesh, India and South Africa who suffer from any dimension of poverty? if yes, explai..
Find the equilibrium price (P), quality (Q), and revenue in a market characterized by the following equations:
The final submission of your project at the end of the term will be a 2000-3000 word document that you will submit to outline the problem, propose your solution, and recommend implementation of your solution.
Which one of the subsequent was not a contributing cause of the decline in investment also thus the recessionary expenditure
The U.S. cigarette industry has negotiated with Congress and government agencies to settle liability claims against it. Illustrate what effect will this have on its optimal price.
The marginal damage to your neighbor's business is a function of how many alligators you keep and the amount of money spent on a fence that separates your properties:
In year 1 the price level is constant and the nominal rate of interest is 6 percent. But in year 2 the inflation rate is 3 percent. If the real rate of interest is to remain at the same level in year 2 as it was in year 1, then in year 2 the nominal ..
Suppose that Jenna’s preferences over baskets containing petrol (good x), and food (good y), are described by the utility function U(x, y) = xy + 100y. The marginal utilities for this function are, MUx = y and MUy = x + 100. Find Jenna’s petrol deman..
You're a sprinter, and in practice today you fell and hurt your leg. An x-ray suggests that it's broken with probability 0.2. Your problem is whether you should participate in next week's tournament. What is the value of perfect information about the..
Which of the following is NOT a general function of law. An official notice that the us supreme court will hear a case is called
If you wanted to assess the competitiveness of a country, would you focus on its spot exchange rate, its real exchange rate, its effective exchange rate, or some other measure of the company's currency's value? Explain
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