I need help with these questions 3) If government spending increases at the same time the money supply increases,what effect will this policy mix have on the equilibrium output and the equilibriuminterest rate? What effect will this policy mix have on investment? Explain.5)A town just passed a new policy that allows its residents to graze cowsfreely. What problem might occur due to this policy? Explain. Can you suggesttwo remedies to the problem that might occur due to this policy. Explain.10)The room for policy to help output return to its natural level is limited in twoways: Monetary policy is limited by the presence of a liquidity trap. Fiscal policyis limited by the presence of a high level of public debt. Explain.

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3) If government spending increases at the same time the money supply increases, what effect will this policy mix have on the equilibrium output and the equilibrium interest rate? What effect will this policy mix have on investment? Explain.

3) If government spending increases at the same time the money supply increases, what effect will this policy mix have on the equilibrium output and the equilibrium interest rate? What effect will this policy mix have on investment? Explain.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: The Influence Of Monetary And Fiscal Policy On Aggregate Demand

Section: Chapter Questions

Problem 8PA

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I need help with these questions

3) If government spending increases at the same time the money supply increases,
what effect will this policy mix have on the equilibrium output and the equilibrium
interest rate? What effect will this policy mix have on investment? Explain.
5)
A town just passed a new policy that allows its residents to graze cows
freely. What problem might occur due to this policy? Explain. Can you suggest
two remedies to the problem that might occur due to this policy. Explain.
10)
The room for policy to help output return to its natural level is limited in two
ways: Monetary policy is limited by the presence of a liquidity trap. Fiscal policy
is limited by the presence of a high level of public debt. Explain.

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16. Suppose that planned investment and planned government purchases do not depend on income:I = 15 and G = 17. Consumption, as you would expect, does depend on income via the consumption function C = 2 + 0.75Y – 0.75T. Net taxes are T = 12. Your friend thinks that the equilibrium will be where Y = 150 but he is wrong. What is the best description of this situation? a. the (Y, AE) point is above the 45 degree line, Y will adjust down b. the (Y, AE) point is above the 45 degree line, Y will adjust up c. the (Y, AE) point is below the 45 degree line, Y will adjust down d. the (Y, AE) point is below the 45 degree line, Y will adjust up 17. (continued) Help you friend by calculating the equilibrium income for the AE model in the previous question. Y = _____
please explain each question. 1. We assumeconstantMPC in our model. Is this assumption true in the real world? 2. What determines the proportion of bonds/money that the household keeps? 3. What effect an increase of government spending will have on the output equilibrium in the goods market? Explain using autonomous spending.
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Suppose that due ot a fiscal stimulus, there is an increase in disposable incomes of $100 billion in the first round. Then, $33 billion was spent in consumption from this initial change of the disposable incomes. Following the same marginal propensity to consume, how much is the change in consumption spending in the next round from the $33 billion?
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