just ii and iii please!! t012m =yn =p2(t)O. =B1B2B3p1(t) y1(t)p2(t) y2(t)10100010012.47.5212.414.2247.527.155212.414.2247.527.155214.224 7.15523 15.61024 6.877952 15.61024 6.877952 15.61024 6.8779524 16.66378 6.667244 16.66378 6.667244 16.66378 6.6672445 17.46447 6.507105 17.46447 6.507105 17.46447 6.5071056 18.073 6.3854 18.073 6.3854 18.073 6.38547 18.53548 6.292904 18.53548 6.292904 18.53548 6.2929048 18.88697 6.222607 18.88697 6.222607 18.88697 6.2226079 19.15409 6.169181 19.15409 6.169181 19.15409 6.16918110 19.35711 6.128578 19.35711 6.128578 19.35711 6.12857811 19.5114 6.097719 19.5114 6.097719 19.5114 6.09771912 19.62867 6.074267 19.62867 6.074267 19.62867 6.07426713 19.71779 6.056443 19.71779 6.056443 19.71779 6.05644314 19.78552 6.042896 19.78552 6.042896 19.78552 6.04289615 19.83699 6.032601 19.83699 6.032601 19.83699 6.03260116 19.87612 6.024777 19.87612 6.024777 19.87612 6.02477717 19.90585 6.01883 19.90585 6.01883 19.90585 6.0188318 19.92844 6.014311 19.92844 6.014311 19.92844 6.01431119 19.94562 6.010876 19.94562 6.010876 19.94562 6.01087620 19.95867 6.008266 19.95867 6.008266 19.95867 6.00826656y2(t)0.21.21.21.2p(t)y(t)2222 900201816141210768-p100Price adjustment-yi(t)p2(0)Income adjustmentt-y2(1)p3t)y3(t)20 Consider the following model(i)(ii)(iii)(iv)(vi)y(t) = 9+0.2(m-p(t))(t+1)=1.2(y(t)- yn)m = 5 y₁ = 6What is the equilibrium price level?What is the equilibrium price level after the money supply increases from 5 to8?What is the equilibrium price level if the natural level of income falls from 6to 4 (a rise in the natural level of unemployment)?Use the model set up in the spreadsheetand plot p(t) for t = 0 to20 on one graph for the price-adjustment coefficients (slope of the Phillipscurve) 1.2, 1.5 and 2, assuming p(0) = 10. Assume the initial price is 10, m = 5and yn = 6.Also, plot on one graph the dynamic responses to income, y(t). [Hint: if theinitial price is 10, what is the initial income?]Comment on your results.

Inflation is an economic concept that refers to the general increase in the price level of goods and…

(ii) What is the equilibrium price level after the money supply increases from 5 to 8? (iii) What is the equilibrium price level if the natural level of income falls from 6 to 4 (a rise in the natural level of unemployment)?

(ii) What is the equilibrium price level after the money supply increases from 5 to 8? (iii) What is the equilibrium price level if the natural level of income falls from 6 to 4 (a rise in the natural level of unemployment)?

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter15: Monetary Policy

Section: Chapter Questions

Problem 6WNG: Graphically portray the Keynesian transmission mechanism under the following conditions: a. A...

See similar textbooks

Similar questions

Consider a macroeconomic model for an open economy with the government. Consumption is given by C = 250 + bYd, where b = 0.8, Yd = (1-t)Y, and t = 0.1. Investment is given by I = 1,200 – 2,000R, and net export is given by X = 525 – 0.1Y – 500R. Assume that G = 1,200. Money demand is given by (Md/P) = 0.1283Y – 1,000R. Assume that P = 1, and the fixed money supply is given by (Ms/P) = 900. Drive the expression for the IS curve from the model. Drive the expression for the LM curve from the model. Drive the IS-LM equilibrium from the model.
Assume that a closed economy finds that households have become wealthier. Which one of the following options correctly describes the effects of this increase in wealth on the equilibrium interest rate and level of output in the IS-LM model? (a) Equilibrium output and income will decrease as the interest rate increases; (b) Equilibrium output and income levels will increase and the interest rate will remained unchanged; (c) Equilibrium output and income will decrease but the interest rate will remain unchanged; (d) Equilibrium output and income will increase as the interest rate decreases.
PLEASE ANSWER ALL MULTIPLE CHOICE QUESTIONS (1-4) 1. Which of the following is FALSE in regards to an overnight target rate of 3.25%? a) The Bank of Canada will pay 3% interest on Chartered Banks' deposits with the Bank of Canada. b) The Bank of Canada will charge 3.5% on loans taken by the Chartered Banks from the Bank of Canada. c) The unemployment rate MUST be equal to the overnight target rate. Hence the unemployment rate is ALSO EQUAL to 3.5%. d) The overnight target rate is the interest rate that Chartered Banks will use when borrowing and lending money to each other. e) There are NO FALSE statements. All solutions provided are correct. 2. If there is an expected increase in Canada's overnight rate, what should we expect to occur? a) The Canadian dollar will be more valuable relative to other currencies. The Canadian dollar sees an increase in demand by foreigners seeking Canadian bonds and interest bearing investments. b) Canadian exports will rise. c) The stock market will…
Assume a two-sector economy model is given by: Y = C + I, C = 97 + 0.7Y, I = 180 – 125i Ms = 255, L1 = 0.2Y, L2 = 220 – 175i where Y is income, C is consumption, I is investment, i is rate of interest, Ms is money supply, L1 is transactionary demand for money and L2 is speculative demand for money. Find the equilibrium income level and interest rate, together with equilibrium levels of C, I, L1 and L2. Show what happens to the equilibrium conditions if autonomous investment falls from 180 to 110. Demonstrate your answers to (a) and (b) graphically. Assume that the demand function for a commodity is given by Qd = 3 – 0.1P and that the supply function is given by Qs = 1 + 0.05P, where P is the price, Qd is the quantity demanded and Qs is the quantity supplied. Suppose the government levies a tax of t cedis per unit sold. If the market is in equilibrium and the tax is increased, show how the price, quantity and tax revenue will change…
Use the IS-LM model to illustrate graphically the impact on output and interest rates of aone-time increase in the price level due to a large increase in oil prices.Be sure to label:i. the axes;ii. the curves;iii. the initial equilibrium values;iv. the direction the curves shift; andv. the terminal equilibrium values.
The following question relates only to the equilibrium in the goods market IN A CLOSED ECONOMY and asks you to carry out a graphical analysis using both the Keynesian cross diagram together with the IS-MP diagram. >>) Suppose after the government has implemented the reduction in taxation that the central bank wants to keep the level of investment at the same level as before the tax reduction. How can the central bank intervene in the market to achieve this goal? Explain and illustrate graphically how the central bank can keep investment at the same level as before. Is there any additional impact of the central bank intervention on output, consumption and interest rates? If so what is the impact?
Suppose that the following system of equations describe the macroeconomy of a hypothetical country: Y= C(y)+I(i)+G : IS or goods market M/p=L(i,y) : LM or money market a) Get the total differentials of the above system of equations and put your answer in matrix representation. b) Taking money supply and government expenditure as exogenous and the price level as fixed, determine and provide economic intuition for the signs and magnitudes of the following multipliers i) dY/dG ii) di/dG c) For a simultaneous increase in both the interest elasticity of investment and interest elasticity demand for money parameters, determine the net effect on the values of the multipliers in part b). d) For a horizontal LM curve, determine the numerical values of your answers in part b) above if: Marginal propensity to consume=5/6 Tax rate=0.25 Interest elasticity of investment=5 Interest elasticity of demand for money=50 Income elasticity of demand for money=2
Suppose we start with a general equilibrium, and the economy experience an improvement in payment technology. Which of the following statements correctly describes the difference between the initial general equilibrium and the final general equilibrium 1. the real interest rate is greater under the final equilibrium 2. the real interest rate is smaller under the final equilibrium 3. the real interst range does not change under the final equilibrium 4. None of the above
An economy with constant prices is described by an extended IS-LM model - that is, by an IS-LM model based on the following additional assumptions: - The central bank can set the real rate r, that therefore becomes the "policy rate" determined by monetary policy, and keeps it at the chosen level- Spending decisions (in particular investment decisions by firms) depend on the "real borrowing rate" r+x, sum of the real policy rate and the risk premium (x). Starting from an initial equilibrium position, suppose that the government cuts net taxes T and that at the same time the risk premoium x goes down. The central bank changes the policy rate to prevent these changes in T and x from affecting equilibrium production, that therefore remains unchanged. In the move from the initial equilibrium to the one that will be reached following the changes in x, T and r described above, the "real borrowing rate" r+x will have gone up, down or will have remained unchanged? Explain why.
With respect to the IS/LM model, which of the following statements is false? Interest rates and output are the endogenous variables The position of the IS curve is given by α (alpha) The IS/LM model is an extension of the income-spending model The LM curve maps interest rates and output such that the money market clears Along the IS curve, planned aggregate spending is equal to income
If the government decides to increase spending on national defense, then in the IS-LM model the IS curve will shift right, the equilibrium interest rate will increase and the equilibrium output will go up. True or False
Suppose the economy's price level is 2 and real GDP is 30 , 000 for the year. Suppose the money supply is 5 , 000. If the money market is in equilibrium, then how many times per year is the typical dollar bill used to pay for a newly produced good or service? 10 8 12 16