Illustrate an economy with a positive output gap in the IS/LM/PC model and explain the dynamics that will bring the economy back to equilibrium.
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Illustrate an economy with a positive output gap in the IS/LM/PC model and explain
the dynamics that will bring the economy back to equilibrium.
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- i need this in word not handwritten Q9. For each of the following sets of data, determine if output will need to increase, decrease, or remain the same to move the economy to equilibrium: Y=1,000;C=100+0.75(Y-T);I=200;G=150;T=100 ________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________ 2. Y=5,000;C=200+0.9(Y-T);I=500;G=400;T=300Assume that an economy prefers an internal balance (Y = Y) to an external balance (NX = 0). Then the only aim of the economy is to keep the equilibrium output level at the level of potential output (Yf= 1500 units). Suppose that the IS and BP models for this economy are as the following. Please the the attached photoAssume an economy is currently operating at point A and answer the following question. Q. What key policy recommendations would you make for an economy like this one that is currently operating at point A? Illustrate using the IS-LM model how the policy recommendations you provide will impact the economy. On your diagram indicate the new point that the policy takes the economy to and label this as point B.
- Assuming that there is no government spending or trade, an economy’s GDP is the sum of domestic consumption C and investment I, i.e. Y = C+ I Assume that I is unaffected by GDP Assume the consumption function is C = c0 + c1Y In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which FIVE of the following statements are correct? Select one or more: A. If the economy above is a demand-driven economy, then the equilibrium solution for Y is given by Y = m(c0 + I), where m = 1/(1 - c1) is the multiplier. B. if c1 = 0.8 the multiplier is equal to 1/0.8= 1.25 C. if c1 = 0.75 the multiplier is equal to 4 D. assume c0 =100, I=50, c1=0.6. The equilibrium value of Y in a demand-driven economy is 300. E. Assume that Y is initially 400, I is initially 100, and the multiplier is 2.5. I increases by 10%. The multiplier implies that in equilibrium Y will increase by 25%. F. The higher is c1 the larger is the multiplier G. If consumers…Explain the likely impact of spending on infrastructure on output in the long-run and show this on your AS-AD diagram.- Assuming that there is no government spending or trade, an economy’s GDP is the sum of domestic consumption C and investment I, i.e. Y = C+ I- Assume that I is unaffected by GDP- Assume the consumption function is C = c + c Y- In any equilibrium aggregate demand, AD must be equal to Y, GDP. Which NINE of the following statements are correct? a. The aggregate demand equation is given by AD = c + c Y + I b. c is equal to autonomous consumption c. if c is a number between 0 and 1, and I+c >0 then the aggregate demand equation is a straight line that must intersect the 45 degree line at some point. d. In a demand-driven economy the AD curve is a vertical line e. In a demand-driven economy demand is equal to supply in equilibrium f. In a supply-driven economy demand is equal to supply in equilibrium g. In a demand-driven economy, supply creates its own demand h. If the economy above is a demand-driven economy, then the equilibrium solution for Y is given by Y= c + c + I i. If…
- Assuming that there is no government spending or trade, an economy’s GDP is the sum of domestic consumption C and investment I, i.e. Y = C+ I Assume that I is unaffected by GDP Assume the consumption function is C = c0 + c1Y In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which of the following statements is correct? choose 5 Select one or more: a. In a demand-driven economy demand is equal to supply in equilibrium b. In a demand-driven economy, supply creates its own demand c. The aggregate demand equation is given by AD = c0 + c1Y + I d. If the economy above is a demand-driven economy, then the equilibrium solution for Y is given by Y = (c0 + I)/(1-c1 ) e. In a demand-driven economy the AD curve is a vertical line f. In a supply-driven economy demand is equal to supply in equilibrium g. if c1 is a number between 0 and 1, and I+c0 >0 then the aggregate demand equation is a straight line that must intersect the…Suppose that the level of income is $1000 and the tax rate is 0.1 %. Given this data, what is the level of disposable income? Use the following information to answer questions 5 through 8: Consider the following information for Slovenia. Category Amount Autonomous Consumption 430 MPC 0.9 Tax Rate 0.25 Investment 800 Government Expenditure 100 Exports 20 MPI 0.05 What is the equilibrium level of GDP in the income-expenditure model? Suppose that there is a decrease in Exports by $20. What is the new equilibrium level of GDP in the income-expenditure model? What is the difference between the original and new GDP as a result of a decrease in Exports? Suppose that MPC is equal to 0.8. What is the spending multiplier?Explain how to derive a total expenditures (TE) curve.
- Name some factors that could cause the SRAS curve to shift, and say whether they would shift SRAS to the right or to the left.Using the AD-AS model (short-run and long-run AS) and the Aggregate Expenditure (AE) model and assuming the Singapore economy was at the natural rate of output at the onset of the crisis: Illustrate the impact of the crisis on the domestic economy using both the AD-AS model and the AE model. Ensure you clearly label all parts of the diagram, clearly demonstrating the original equilibrium and the COVID-19 outcome equilibrium.Use the AE model to explain and show the impact of an autonomous fall in the value of goods exported to China by Australia. (You can assume the fall is constant across all levels of real GDP). Be sure to discuss in detail, the process by which this fall is transmitted through the economy. Now after this fall in exports is worked through, explain and show the impact of an autonomous fall (of lesser magnitude than for exports) in the value of goods imported by Australia from China. (You can assume, as before, that the size of the fall is constant across all levels of real GDP). Again, be sure to discuss in detail, the process by which this fall is transmitted through the economy.
