Goods Market: Money Market: C=50 + 0.8(Y-T) MS=490 I=120-400r MD=.5y-100r G=110 T=50 Suppose there is an increased risk in the financial markets. Show graphically what happens to
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Goods Market: Money Market:
C=50 + 0.8(Y-T) MS=490
I=120-400r MD=.5y-100r
G=110
T=50
Suppose there is an increased risk in the financial markets. Show graphically what happens to
r, Y, and P in the SR and LR using both IS/LM/FE and AD/AS.
Suppose there is a huge drop in consumer confidence. Show graphically what happens to r, Y,
and P in the SR and LR using both IS/LM/FE and AD/AS.
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- Md = a1 + a2 Y + a3 R + a4 P + u (1)Ms = B1 + B2 Y + e (2)Md= Ms = M* (3) In this system of equations, Md represents money demand, Ms money supply, Y national income, R interest rate, and P price level. u and e are the random errors. (3) shows the equilibrium condition in money market.a) Show the endogenous and exogenous variables in this system and indicate if regressions (1) and/or (2) are identified. b) Given the system of equations, show how you estimate regression (2) using 2SLS method. Explain.The financial system in Jamaica has been the subject of much attention since the news broke of the alleged fraud at Stocks and Securities Limited (SSL). The governor of the Bank of Jamaica (BOJ) has been fielding calls from concerned investors, international financial institutions, and even other regional regulators concerning the impact of this situation and the negative media reporting would have on the stability of the financial system in Jamaica and the Caribbean region.The governor would like to preserve confidence in the financial markets and institutions and has decided to embark on a series of educational “road-shows” where he will address targeted stakeholders such as the American Chamber of Commerce (AMCHAM), investor groups and the media.In this regard, the governor has assigned your team of senior professionals employed at the Bank of Jamaica to prepare a presentation slide deck for his address. Give an overview of the structure of the Jamaica financial systemThe role of…Why was the COVID-19 crisis so much shorter, but deeper, than the great financial crisis? What are the differences in labor-market responses in the COVID-19 pandemic between UK/Europe and the US?
- Assume a two-sector economy model is given by: Y = C + I, C = 97 + 0.7Y, I = 180 – 125i M s = 255, L 1 = 0.2Y, L 2 = 220 – 175i where Y is income, C is consumption, I is investment, i is rate of interest, M s is money supply, L 1 is transactionary demand for money and L 2 is speculative demand for money. a) Find the equilibrium income level and interest rate, together with equilibrium levels of C, I, L 1 and L 2 . b) Show what happens to the equilibrium conditions if autonomous investment falls from 180 to 110. c) Demonstrate your answers to (a) and (b) graphically.In recent years, the US and few developed countries have interest rates falling to very low levels. Does this situation was affected by the COVID-19 pandemic? Explain this situation according to Keynesian theory and explain the policies used by the Government and Central banks.This is not a writing assignment, this is a multiple-choice question As a result of the coronavirus crisis of 2020 and the consequent lockdowns that followed across the U.S. economic activity in many of the states with the highest levels of economic activity prior to the crisis, have come (came) to a standstill. As stock and other financial markets also declined, millions of jobs were lost weekly, and both personal and investment incomes plummetted, it is expected that the tax revenues collected by the Federal government will also be much below the previously expected levels in 2020. In order to boost the economy and avert an economic depression (a serious economic recession) the Federal government pumped over $2 trillion dollars of economic stimulus so that people whose incomes had dropped sharply or disappeared entirely, would still be able to continue making basic purchases, and this will give businesses a reason to produce and hire workers. This increased Federal spending in the…
- Note Dear student, There are multiple sub parts in the question that you have asked. I am answering first three sub parts for you. You are requested to repost the question, mentioning the three sub parts you wish to have answer for. Please do mention the final answer that i am going to provide to you for the first three sub parts, so that it becomes convenient for the tutor to provide answer for further sub parts. Introduction IS LM model, shows relation between goods market, money market, interest rates and Output. Answer a) Y = C Government purchase multiplier = 1 / (1 - MPC (1-t)) MPC = 0.75 t = 0.20 Government purchase multiplier = 1 / (1 - 0.75 (1-0.20)) Government purchase multiplier = 1 / (1 - 0.75 (0.80)) Government purchase multiplier = 1 / (1 - 0.60) Government purchase multiplier = 1 / 0.40 Government purchase multiplier = 2.5 Lump sum tax multiplier = - MPC / (1 - MPC (1-t) ) Lump sum tax multiplier = - 0.75 / (1 - 0.75 (1-0.20)) Lump sum tax multiplier = -…The rand is back as the world’s most volatile major currency, and options pricing suggests it’s not going to lose that status any time soon.A gauge of expected swings over the next six months, based on prices of options to buy and sell the rand, has jumped 175 basis points since the beginning of August to 16.1% on Thursday.Historical volatility climbed 61 basis points to 13.8%, the highest among 16 major developed-nation and emerging-market currencies tracked by Bloomberg.That took the spread of implied over realised volatility to the most in almost a year, as traders hedge against currency fluctuations amid the escalating trade war and concern about South Africa’s fiscal outlook. The premium of options to sell the rand over those to buy it, known as the 25 Delta risk reversal, widened 23 basis points to 338. South Africa’s currency has depreciated 6.5% versus the dollar in August, the worst performance among emerging-market currencies after Argentina’s peso.This week alone, it has…Malaysians are at their worst financial position in 2022 compared with the last five years, and thelooming recession may push them to the brink with dwindling savings coupled with theaftermath of the Covid-19 pandemic. A recent survey by Malaysian financial services websiteRinggitPlus revealed that 70 per cent of Malaysians saved less than RM500 per month (S$153)in 2022 or did not save at all. “This is compared with 52 per cent of Malaysians saving less thanRM500 monthly in 2021, the largest year-on-year increase since 2018,” the RinggitPlusMalaysian Financial Literacy Survey 2022 showed....Mr Patrick Tay, deals partner, economicsand policy at Malaysia PwC, is not surprised by the decline in savings in 2022. “One reason forthe depleted savings is low wages and higher inflation. But another key reason is that Malaysiansare spending more post-pandemic on holidays or other leisure expenses because some may feelthat they saved during the pandemic, and it is fine to now spend this year…
- An economy has a constant population. Everyone’s demand for chequing deposits is5,000 goods in total in every period. The economy has a total endowment of 10,000goods per period. There is a total stock of unintermediated capital of 1,000 goods in each period. Bank deposits are the only form of money in the economy. Deposits of banks are subject to a 20 percent reserve requirement. The net real rate of return on capital is 10 percent per period. After meeting the reserve requirement, banks invest the remainder of all deposits into capital. Individuals do not hold capital. The fiat money stock is$2,000 per period. Capital takes two periods to generate final returns What is this economy’s real GDP? (A)16,050. (B)14,840. (C)11,560. (D)10,000 Can you show your workIs either helicopter money or quantitative easing preferred in times of severe recessions in order to boost economic activity? Explain your reasoning.ProblemExplain whether each of the following statements is true, false, or could go either way, depending on the circumstances. If a question has more than one part,please explain why each part is true, false, or uncertain. a) the Central Bank of Ghana buys bonds through open market operations; such apolicy would simultaneously decrease interest rates and increase out put.b) Suppose an economy is running a government budget deficit. Assume that C= C0+C1 (Y-T). A decrease in government spending will cause the deficit to be come small if taxes do not change? Note; C is consumption, Y is GDP, T is tax,C1 Is the marginalpropensity to consumeand C0 Is autonomous consumption.c) Following a real depreciation of a country currency, the trade balance of that country improves.d) In an economy with technological progress, the saving rate is irrelevant in the long-run.e) The Monetary policy Committee of the Bank of Ghana after its minJanuary January 2019 deceased the monetary policy rate from 17%…