The keynesian is-lm model

Assignment Help Microeconomics

Reference no: EM13804998

According to the Keynesian IS-LM model, what is the effect of each of the following onoutput, the real interest rate, employment, and the price level? Distinguish between the short runand the long run. Be sure to express graphically and explain in words.

(a) Increased tax incentives for investment (the tax breaks for investment are offset by lump-sumtax increases that keep total current tax collections unchanged).

(b) Increased tax incentives for saving [as in Part (a), lump-sum tax increases offset the effect ontotal current tax collections].Summer 2015Econ 2102

(c) A wave of investor pessimism about the future profitability of capital investments.(d) An increase in consumer confidence, as consumers expect that their incomes will be higher in the future.

Reference no: EM13804998

Questions Cloud

No opportunity cost for travel time for him : John wants to travel from Pittsburgh to Philadelphia. It takes him 5 hours to drive by car or 1 hour to fly by plane. If the total car rental (fuel and other costs are included) cost is $120 and flight ticket from Pittsburgh to Philadelphia is $200, ..

Suppose your firm is considering investing in a project with : 1.Suppose your firm is considering investing in a project with the cash flows shown below, that the required rate of return on projects of this risk class is 8 percent, and that the maximum allowable payback and discounted payback statistics for the ..

Overview of bls statistics on unemployment : Review the information available on the following websites. You will use this information to answer the questions below:Overview of BLS Statistics on Unemployment: http://www.bls.gov/bls/unemployment.htmUnemployment, total (% of total labor force): ..

Monopoly is considering selling several units of homogeneous : A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 120 - 0.25P, and the marginal cost of production is $160. Determine the optimal number of units to put i..

The keynesian is-lm model : According to the Keynesian IS-LM model, what is the effect of each of the following onoutput, the real interest rate, employment, and the price level? Distinguish between the short runand the long run. Be sure to express graphically and explain in wo..

Determine the optimal number of bran muffins to sell : The American Baker’s Association reports that annual sales of bakery goods last year rose 15 percent, driven by a 50 percent increase in the demand for bran muffins. Most of the increase was attributed to a report that diets rich in bran help prevent..

Why might government want to regulate natural monopolies : Describe an example of a real-world industry or market that would be considered by economists to be a natural monopoly. What characteristics of the industry make it a monopoly? What is the impact of the monopoly power on its customers? Why might gove..

A fast growing firm recently paid a dividend of : 1. A fast-growing firm recently paid a dividend of $0.40 per share. The dividend is expected to increase at a 20 percent rate for the next three years. Afterwards, a more stable 10 percent growth rate can be assumed. If an 11 percent discount rate is..

How does monetary policy aim to avoid inflation : What are the factors that would influence the Federal Reserve in adjusting the discount rate? How does the discount rate affect the decisions of banks in setting their specific interest rates? How does monetary policy aim to avoid inflation?

User Account

All Pages