Values of the real interest rate

Assignment Help Business Economics
Reference no: EM135587

Q. Desired consumption is = 100 + 0.8Y - 500r - 0.5G, and desired investment is = 100 - 500r. Real money demand is /P = Y - 2000i. Other variables are = 0.05, G = 200, = 1000, and M = 2100.

(A) Find the equilibrium values of the real interest rate, consumption, investment, and the price level.

(B) Suppose the money supply increases to 2800. Find the equilibrium values of the real interest rate, consumption, investment, and the price level.

Reference no: EM135587

Questions Cloud

Evaluate the amount of subscription revenue : Use the horizontal model to record the effects of the subsequent items Subscription fees received in advance in September 2010.
Industry significantly increases advertising expenditures : Under oligopoly, if one firm in an industry significantly increases advertising expenditures in order to capture a greater market share, it is most likely that other firms in that industry.
Two alternative recreation projects : A county is considering using a piece of park land for one of two alternative recreation projects. Project S would require construction costs of $2 million (year 0) and generate net benefits of $1 million per year for 10 years.
Calculate the breakeven output quantities : Using a wholesale price of $4 per case in each state, calculate the breakeven output quantities for each alternative.
Values of the real interest rate : Find the equilibrium values of the real interest rate, consumption, investment, and the price level.
Reinvestment in the firm this year : MMM expects to generate $60,000 in earnings that will be retained for reinvestment in the firm this year.
Active policy recommend government intervention : Why do proponents of active policy recommend government intervention to close an expansionary gap. Some economists argue that only unanticipated increases in the money.
Determine the demand for money : Compare and contrast the way Classical and Keynesian theory determine the Demand for Money and how it is related to the Money Supply
Demand for healthcare services : Suppose that the demand for healthcare services is perfectly inelastic while the supply curve is upward sloping. Analyze the impact.

Reviews

Write a Review

Business Economics Questions & Answers

  A major statistics canada household survey

A major Statistics Canada household survey, the Survey of Labour and Income Dynamics or SLID, the latest of which is referred to as SLID 2009.

  Air transport for businesspeople and tourists

Air transport for businesspeople and tourists

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Idea that a country can simultaneously pursue

Idea that a country can simultaneously pursue only two of the three following policies: free international-capital flows, monetary policy for domestic stabilization, and a fixed exchange rate.

  Reinvestment in the firm this year

MMM expects to generate $60,000 in earnings that will be retained for reinvestment in the firm this year.

  When would it make sense for a factory

When would it make sense for a factory that is losing money to remain in operation

  Explain an economy is initially in equilibrium

Explain an economy is initially in equilibrium at the natural level. The central bank increases the money supply.

  Quantity increase or decrease depends on demand

The equilibrium quantity increase or decrease depends on Demand

  How could we modify the system to eliminate

Suppose she is offered a new job that would pay her $15,000 and would bring her earnings high enough so that she no longer qualified for any welfare benefits.

  Calculate the price elasticity of demand for newtons donuts

Calculate the price elasticity of demand for Newton's Donuts

  Profits associated with polluting for friedman

Profits associated with polluting for Friedman Inc. are π = 40Q - 2Q2, where Q = pollution emitted (in tons), and profits are measured in dollars.

  Conclude that non-residents must have for swimming at pool

The municipal swimming pool charges lower entrance fees to local residents than to non-residents. Conclude that non-residents must have for swimming at the pool than residents.

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