Consider the following economy: cd = 1,275 + 0.50(Y-T)- 200r d = 900 – 200r L = 0.5Y- 200i Desired consumption: Desired investment: Real money demand: Full-employment output: Y = 4600 Expected inflation: T° = 0 Initially the levels of taxes, government purchases and money supply were, T= G = 450 and M = 9,000. Initially, the equations for the /S, LM, and the aggregate demand curves were, IS: Y = 4800 – 800.00r LM: Y= 18000 + 400r AD: Y= 1600 + 12000 Initially, the general equilibrium values of output (Y), the price level (P), the real interest rate (r), consumption (C), and investment (I) were: Y = 4600, P = 4.00, r= 25.00%, C = 3,300.0, / = 850.0. Now suppose that T = G = 450, but money supply changes to M, = 4,500. Determine the equation for the new aggregate demand curve. (First you need to derive the new IS and LM equations. Use these equations to derive the new AD equation.) Aggregate demand equation: (Enter your responses rounded to the nearest whole number.) Y=

Consider the following economy: cd = 1,275 + 0.50(Y-T)- 200r d = 900 – 200r L = 0.5Y- 200i Desired consumption: Desired investment: Real money demand: Full-employment output: Y = 4600 Expected inflation: T° = 0 Initially the levels of taxes, government purchases and money supply were, T= G = 450 and M = 9,000. Initially, the equations for the /S, LM, and the aggregate demand curves were, IS: Y = 4800 – 800.00r LM: Y= 18000 + 400r AD: Y= 1600 + 12000 Initially, the general equilibrium values of output (Y), the price level (P), the real interest rate (r), consumption (C), and investment (I) were: Y = 4600, P = 4.00, r= 25.00%, C = 3,300.0, / = 850.0. Now suppose that T = G = 450, but money supply changes to M, = 4,500. Determine the equation for the new aggregate demand curve. (First you need to derive the new IS and LM equations. Use these equations to derive the new AD equation.) Aggregate demand equation: (Enter your responses rounded to the nearest whole number.) Y=

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter20: Monetary Policy

Section20.A: Policy Disputes Using The Self Correcting Aggregate Demand And Supply Model

Problem 3SQP

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