6) Consider the following IS-LM model: C = 200 +0.25YD I = 150+ 0.25Y -1000i G = 250 T = 200 M - 8,000i P M = 1,600 P a. Derive the IS relation. b. Derive the LM relation. c. Solve for the equilibrium real output. d. Solve for the equilibrium interest rate. e. Solve for the equilibrium values of C and I and verify the value you obtained for Y by adding up C, I, and G. = = 2Y -
Q: Refer to Figure 3 below: Profit can always be increased by increasing the level of output by one…
A: The point where the marginal cost and the marginal revenue of a firm equtes to each other is…
Q: part D E F needed Consider Points A, B, C, D, E, F and G. a. Which points are inefficient?…
A: d) In the given picture, the shape of the PPF curve is concave which implies the diminishing…
Q: part 9 10 11 a. i. What is the equilibrium price of protective masks before trade? ii. What is the…
A: Answer: (9). According to the above figure, the total surplus before the trade is shown by the…
Q: Consider a closed economy with a government. Consumption is given by C = 1,000 + 0.8Yd Further, t…
A: Aggregate output is the sum of consumption, investment, government spending and net exports in an…
Q: Multiple choice question and give a short explanation about your answer When the replacement cost is…
A: The question is based on the concept called Tobin's Q. Where the Tobin's Q is as follows,Q = Market…
Q: 1. An investment company advertises accounts that actually yields 13% interest per year when…
A: Given the information: Actual interest rate = 13% Use the below formula: Nominal interest rate = m ×…
Q: Analyse graphically how the Solow model growth implies that poor countries should experience a…
A: The Solow Growth Model is an exogenous model of economic development that analyzes differences in…
Q: It is argued that government agencies force companies to give consumers information and this this…
A: A) in perfect competitive market:- 1) in perfect competitive market, there are many number of…
Q: Assume that a product sells for $100 per ton and thatPittsburgh is the basing-point city for…
A: Given: Product selling price= $100 per ton Shipping cost=$10 Note: Due to multiple subparts being…
Q: If an asset has a first cost of P50,000 with a P10,000 estimated salvage value after 5 years,…
A: The correct answer is given in the second step.
Q: The U.S CPI is a Laspayres price index (base year weights). All things equal it will Overstate…
A: The Laspayres Index is a type of pricing index. This Index is a way for calculating the CPI…
Q: 2. Consider a society consisting with three individuals whose demand curves for a pure public good…
A: Public good refers to the good which shows that the goods are nonexcludable and nonrival.…
Q: 5. Flextire Manufacturing is considering two mutually exclusive proposals. Each will cost $80,000…
A:
Q: (b) Suppose there are two roommates John and Bill; each has a wealth of $1000. They are trying to…
A: Let us write the well being/welfare of all the options in terms of the valuation provided - Strategy…
Q: The equations that correspond to the following market are as follows: Qd = -200P + 3,000 Qs = 200P…
A: The technique of developing a roadmap for the layout and manufacture of a product or service is…
Q: Consider the Production Possibility Frontiers of two countries, Australia and Brazil. Assume both…
A:
Q: Show that given a linear demand schedule and constant marginal cost, the excise tax will lead to a…
A: market is in equilibrium where demand and supply are equal . the process of getting equilibrium is…
Q: True / False questions with EXPLAINATION 1) In AD-AS model , if the government reduces tax on…
A: AD- AS Model is a long /medium run model which systematically explains the movements to equilibrium…
Q: CHOICES: a. Both statements are TRUE b. 1st statement is TRUE, 2nd is FALSE c. Both statements are…
A: Income inequality:- Income disparity refers to how income are allocated unequally across a society.…
Q: Which of the following is NOT generally considered a theme in the political and economic development…
A: * ANSWER :- From the given information the answer is provided as follows ,
Q: f the real value of an item bought ten years ago is less than it’s nominal value at that time, what…
A: The nominal value of an item is adjusted for inflation, and its actual worth is measured in terms of…
Q: Show that an agent with utility function u(x) = log x is more risk averse than an agent with utility…
A: Risk aversion means avoiding the risk.
Q: The possible effect of an expansionary monetary policy would be _______. a. decrease in money supply…
A: As we can explain the expansionary monetary policy in simple words that it means expanding the…
Q: ssume that a country is endowed with 4 units of oil reserve. There is no oil substitute available.…
A: In behavioral economics, willingness to pay (WTP) refers to the lowest or highest price at which a…
Q: The neutrality of money means that a change in money supply has no impact on output over any time…
A: Money is supposed to be neutral when the last time change in the Money supply or Money request makes…
Q: What are the advantages of the affinity group model of organization? What are its disadvantages?
A: Answer - affinity group model of organization:- It is the model where group of people work…
Q: 28-Which of the following is the best example of a natural monopoly? A) owning the only licensed…
A: A natural monopoly is a monopoly in which the main producer in an industry, generally the first…
Q: Distinguish between form, time, and place utility with at least one real example each.
A: Possession utility is the value or utility that a consumer derives from being able to take…
Q: 2. The following information has been extracted from National income accounts data of a certain…
A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…
Q: What information would be required to compute the risk-asset ratio under Basle I?
A: Basel I is the first of three sets of international banking rules. Basel one was shaped with the…
Q: A graduating class of 100 engineers wants to present a gift of $500,000 to the university at their…
A: Future Value = 500,000 Number of people contributing = 100 Interest rate = 8% Cash flow is in…
Q: In The Wealth of Nations (1776), what does Adam Smith identify as the primary driver of the success…
A: "An Inquiry into the Nature and Causes of the Wealth of Nations," also known as "The Wealth of…
Q: Which one is correct? UK currency is a commercial bank liability UK currency is a central bank…
A: the central bank of England is known as the Bank of England. Laid out in 1694 to go about as the…
Q: Evaluate which of the following is true. The unbalance transportation problem where the total supply…
A: When talking about transportation problem, it can be said that this problem arises when there is…
Q: Juliana gets the following 15 units for free if she buys 30 units of good Y (at RM2 per unit). This…
A: The equation of the budget line procedure hinges on the prices of goods and the income of customers.…
Q: True or False: The price of gasoline is determined by oil companies rather than supply and demand.…
A: When talking about the market structure, it can be seen that a competitive market is one with high…
Q: High quality information gruarantees that every decisions made will be a successful one that…
A: High-quality information refers to information that is: Accurate Complete Unique Consistent These…
Q: 40 50 60 55
A: A) in perfect competitive market:- 1) in perfect competitive market, there are many number of…
Q: The relationships between demand and supply of the Olympios Dollar and the exchange rate with the…
A: Demand function for dollars : E = 8.75 - 0.03D D = (8.75 - E )/0.03 Supply function for dollars :…
Q: CHOICES: a. Both statements are TRUE b. 1st statement is TRUE, 2nd is FALSE c. Both statements are…
A: The agricultural sector plays an important role in an economy. It is a primary sector that acts as a…
Q: Refer to Figure 3 below: Profit can always be increased by increasing the level of output by one…
A: Meaning of Monopoly Market: The term monopoly refers to the situation under which there is only an…
Q: 1) There are 1000 pear producers that have identical cost functions, where q is the number of…
A: Note: in the first question the cost function is missing thus I am solving the second question only.…
Q: Assume that a country is endowed with 4 units of oil reserve. There is no oil substitute available.…
A: * SOLUTION :- Given that , the marginal willingness to pay for oil in each period is given by P…
Q: 11. The following payoff table involves two players each of whom has three possible moves. L M N L…
A: A dominated strategy is such a strategy that a particular player will never select, no matter the…
Q: Which of the following is the way an economist would define a current United States dollar bill?…
A: Fiat money is a currency that is not backed by commodities like gold but issued by the government.…
Q: David earned a salary of $43,500$43,500 in 1994 and $89,000$89,000 in 2010. The consumer price index…
A: The Consumer Price Index measures the overall change in consumer prices over time based on a…
Q: Discuss what markets are?
A: Meaning of Microeconomics: The term microeconomics refers to that situation under which the…
Q: In order to measure income inequality, economists look at how income is distributed in ... Group…
A: Economics is the branch of knowledge in which we study the scarcity of resources and unlimited…
Q: Supply & Demand Analysis Activity For each scenario, show how the curve of Supply and Demand will…
A: So the impact on each scenario will be different due to different problems. Below is the table…
Q: 2. Consider a society consisting with three individuals whose demand curves for a pure public good…
A: Pure public good refers to those goods which show that the goods are nonrival and nonexcludable.…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
- Consider the following IS-LM model: C = 200 + 0.25 YD ; I = 150 + 0.25Y – 1000i ; G = 250 ;T = 200 ; (M/P)d = 2Y – 8000i ; M/P = 1600Derive the (a) IS-relation and the (b) LM-relation.Solve for the equilibrium (c) real output and (d) interest rate.(e) Solve for the equilibrium values of C and I and verify yourequilibrium output by: Y = C + I + G(f) Now suppose that the money supply increases to M/P = 1840. Solve for Y, i, C, I and describe in words the effectsof monetary expansion.(g) Set M/P to its initial value 1600. Suppose, that governmentspending increases to G=400. Summarize the effects offiscal expansion on Y, i, and C.Question: Consider the IS-LM model derived. Suppose the economy of Economica is initially at the general equilibrium. Suppose further that the government considers the increase of the effective tax rate on capital and hires you as a consultant. a. Explain and show graphically how an increase in the effective tax rate on capital would affect the labor, goods, or the asset market. b. Explain and show graphically how an increase in the effective tax rate on capital would affect the short-run equilibrium. c. Explain and show graphically how an increase in the effective tax rate on capital would affect the long-run equilibrium.1- Consider the following IS-LM model: I= 150 + 25Y - 1000i, (M/P 2Y 8000i, G=250, T= 200 C=200 + 25YD. NX 0, M/P = 1600. a) Derive the IS relation b) Derive the LM relation. c) Solve for equilibrium real output (Y*). d) Solve for the equilibrium interest rate (i*) e) Solve for the equilibrium values of C and I, and verify the value you obtained for Y by adding C, I, and G. ) Now suppose that the money supply increases to M/P =1,840. 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 1,600. Now suppose that government spending increases to G = 400. Summarize the effects of an expansionary fiscal policy on Y, 1. C. h) The expansionary fiscal policy in part (g) have resulted in large budget deficit (T= G = 200 – 400 = -200). Suggest a policy mix to decrease fiscal deficit to achieve a balanced budget (T = G = 0). b(Ctrl) - 立
- 1. Consider the following simple Keynesian model, (i) Rewrite the model into matrix form with Y, C and I as endogenous variables and Go and i as exogenous variables. (The coefficient matrix must be a 3 by 3 matrix.) Y=C+I+Go C = 200+ 0.8Y I= 1000-2000 (ii) Compute the equilibria Y*, C* and I* as functions of Go and i using Cramer's rule. 8Y* (iii) Find and di ƏY* ƏGo (iv) Give an economic interpretation of national income? ƏY* " ƏGo what should the government do if it wants to raiseII. Consider the following IS-LM model: C = 200 + 0.25Y, I = 150 + 0.25Y – 1,000i %3D G = 250 T = 200 (M/P)d = 2Y – 8,000i M/P = 1,600 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 for equilibrium 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 for the equilibrium interest rate. (Hint: Substitute the value you obtained for Y in part (c) into either the IS or LM equation and solve for i.) 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 = 1,840. Solve for Y, i, C, and I, and describe in words the effects of an expansionary monetary policy. g. Set M/P…Suppose the economy of Ghana in 2020 was characterized by C = ¢400m + 0.75(Y-T); I = ¢400m - 20r; G = ¢200m; T = ¢200m; Ms = ¢250m/P; Md = 0.25Y - 10r a. Derive the IS and LM curve equations. Give a brief explanation as to why they are positively or negatively sloped. b. Calculate equilibrium output and interest rates (in this case assume P=1). Econ313 2020/2021 PROBLEM SET 2 Page 1 of 2 c. Suppose the government of Ghana in the second half of 2020 spent an additional ¢50m to mitigate the impact of the COVID pandemic on households and businesses and government tax revenue declined by 10% as a result of the lockdown in Ghana what will be the new equilibrium output? d. Will the policy in (c) above have an impact on interest rate? Briefly explain. e. What is the amount of the fiscal deficit incurred as a result of the government fiscal policies as pursued in (c) above?
- Suppose the economy begins with output equal to its natural level. Then there is a decrease in consumer confidence, as households attempt to increase their saving, for a given level of disposable income. In AS-AD and IS-LM diagrams, show the effects of the decline in consumer confidence in the short run and the medium run. Explain why curves shift in your diagrams. Please please please put a picture of the diagrams! Thank you so much Please give me correct answer with full expalanation and carefullly draw otherwise i give multiple downvote.1. Consider a model of a goods market in a closed economy that is characterized by the followingequations:Consumption : C = 160 + 0.6(Y −T )Investment : I = 150Taxes : T = 100Government spending : G = 110EQ Output : Y = 1/(1 −c1)[c0 + I + G −c1T](a) Solve for the output in the economy.(b) Compute the sum of private and public saving.(c) Considering your answer to part b and the information given above, is this economy in equilib-rium? Explain.I have to analyze, using the IS-LM model, the macroeconomiceffects of an increase in savings in the short term and its implications for long-term growth. Specifically, I have to suppose that households (consumers) lose confidence and start saving more for any level of disposable income. Can you plase answer the following question (using graphs where possible): In terms of total savings and, therefore, of potential long-term growth, is a flat LM curve or a positive sloping LM curve better?
- I have to analyze, using the IS-LM model, the macroeconomiceffects of an increase in savings in the short term and its implications for long-term growth. Specifically, I have to suppose that households (consumers) lose confidence and start saving more for any level of disposable income. In terms of total savings and, therefore, of potential long-term growth, is a flat LM curve or a positive sloping LM curve better, in which investment was assumed to be exogenous?Consider the following IS-LM model: C = 201+0.44YD /= 147+0.25Y-1,043/ G= 313 T = 1,2 MIP = 250 0.04 1.9Y-7,558/ The IS equation is determined to be Y=1777.42-3364.521 The LM equation is given as /=0.04 Initial equilibrium values of Y, C, I, and the real money supply are calculated as Y = 1,643 C=814 /=516 M/P = 2,819 A. the real demand for money rises. OB. equilibrium consumption increases. Now suppose that the central bank cuts the interest rate to 2%. In a graph of the IS-LM model, this causes the LM curve to shift downward (Round your response to the nearest integer.) Following the change in the interest rate to 2%, the value of equilibrium real output becomes Following the change in the interest rate to 2%, the values of the new equilibrium C and/are: C = (Round your responses to the nearest integer.) /= (Round your responses to the nearest integer.) Which of the following statements is not consistent with the effects of an expansionary monetary policy? As the interest rate falls,…Consider the following IS–LM model: C = 100 + .25YD I = 50 + .25Y - 1000i G = 150 T = 100 (M/P) d = 2Y - 8000i (M/P)s = 1000 a. Derive the IS relation b. Derive the LM relation c. Solve for equilibrium real output. d. Solve for the equilibrium interest rate e. Solve for the equilibrium values of C and I f. now suppose that the money supply increases to M/P = 1010. Solve for T, f. suppose that government spending increases to G = 155 What is the value of money supply? g. From what we studied, which policy, expansionary fiscal policy or expansionary monetary policy will undoubtedly increase investment.