In an OLG model with money: Each gen picks 12 banans when young, 4 bananas when old. Central bank prints out 2 units of money, given to gen 0 for free. The nominal GDP of this economy is $_____.
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Q: In an OLG model with money: Each gen picks 12 banans when young, 0 bananas when old. Central bank…
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Q: In an OLG model with money: Each gen picks 12 banans when young, 0 bananas when old. Central bank…
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In an OLG model with money:
Each gen picks 12 banans when young, 4 bananas when old.
Central bank prints out 2 units of money, given to gen 0 for free.
The nominal
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- In an OLG model with money: Each gen picks 12 banans when young, 0 bananas when old. Central bank prints out 2 units of money, given to gen 0 for free. The nominal GDP of this economy is $______ each period.125.) If the price level, P, is 16, money demand equal to money supply is $1,000, and the desired cash balance ratio, little k, is .25, what is real GDP? 4000 2000 250 15.625In an OLG model with money: Each gen picks 12 banans when young, 0 bananas when old. Central bank prints out 2 units of money, given to gen 0 for free. Young generation= Cy Old generation= Co Cy= 4-vm Co= 0 +vm The population of this economy is ______ in each period.
- Assume that investment, government expenditures, taxes are autonomous.C = 2000 + 0.65* (Y-T)I = 900 – 50iG = 400T = 1500M = 1000P = 2L = 0.50Y-25ia.What is the value of the sensitivity money demand to the level of income?b.What is the value of the nominal supply?c.What expression represents the IS curve?d.What is the equilibrium interest rate, i*?e.What is the equilibrium income, Y*?Assume the following IS-LM model: expenditure sector: money sector: AD = C + I + G + NX I = 300 - 20i M = 700 C = 100 + (4/5)YD G = 120 P = 2 YD = Y - TA NX = -20 md = (1/3)Y + 200 - 10i TA = (1/4)Y How much investment (I) will be crowded out if the government increases its purchases by deltaG = 160 and nominal money supply (M) remains unchanged?The following equations describe a small economy. Figures are in millions of dollars; interest rate (i) is in percent per annum. Assume that the price level (P) is fixed. Goods Market C = Co + cYD (Private consumption) YD = Y + TR – T (Disposable income) T = To + tY (Total taxes) I = Io – bi (Private investment) G = Go, TR = TRo (Gov. Expenditure and Transfers, respectively) Y = C + I + G (Goods mkt. equilibrium condition) Money Market L = kY- hi (Demand for real balances) Ms = Mo/P (Real money supply) L = Ms (Money mkt. equilibrium condition) Endogenous Variables: C, YD T, I, Y, L, Ms and i Exogenous Variables: Co = 300, To = 80, Io = 450, Go = 300, TRo = 100, Mo = 350, P =1 Parameters: c = 0.85, t = 0.15, b = 50, k = 0.25 and h = 62.5 Policy…
- Assume the following IS-LM model: expenditure sector: money sector: AD = C + I + G + NX I = 300 - 20i M = 700 C = 100 + (4/5)YD G = 120 P = 2 YD = Y - TA NX = -20 md = (1/3)Y + 200 - 10i TA = (1/4)Y a. Derive the equilibrium values of consumption (C) and money demand (md). b. How much investment (I) will be crowded out if the government increases its purchases by DG = 160 and nominal money supply (M) remains unchanged? c. By how much will the equilibrium level of income (Y) and the interest rate (i) change, if the Fed responds to this increase in government purchases by increasing nominal money supply to M' = 1,100?COURSE: MACROECONOMICS - IS-LM and/or MUNDELL FLEMING MODELS Refer to 2 different models (and/or conditions) under which an increase in the amount of money circulating in the economy has a NULL impact on GDP. Then, refer to 2 different models (and/or conditions) under which an increase in the amount of money circulating in the economy has a MAXIMUM impact on GDP. EXPLAIN very briefly the mechanism by which each model generates that NULL or MAXIMUM impact on GDP. Hint: 2 conditions under increase of M (money) and how impact null (zero) and maximum on GDP. Example, considering both fiscal or monetary policies or liquidity trap model. Please graph and explain on detail both cases.Consider a closed economy, Lone. To tackle the severe recession, hergovernment conducts a tax rebate to the households. Assume that the central bank is independent on the government decision. Use the IS-LM model to explain how this government act affects the interest rate, investment and income of Lone. Evaluate the effectiveness of the above policy in tacking the recession if investment demand in Lone is interest elastic. Explain in words.
- 1. In an OLG model with money: Each gen picks 12 banans when young, 4 bananas when old. Central bank prints out 2 units of money, given to gen 0 for free. A. In equilibrium, 1 money = ______ bananas. B. The level of employment is _____ in each period. (how many people are employed each period) C. The unemployment rate in this economy is ______%. what other information do you need? I dont have any other information, this is all that I was given.The consumption function of the economy of Macro-land is given by ? = 200 + 0.75(? − ?)The investment function is given by ? = 200 − 25? . Government purchases and taxes are both 100. (a) Find the equation of the IS curve (b) The money demand function in Macro-land is given byMd= ? − 100? The nominal money supply M is 1,000 and the price level is 2. Find the equation of theLM curve (c) Find the interest rate and income for which the goods and services and money marketsare simultaneously in equilibrium. (d) Suppose the government purchases are raised from 100 to 150. What are the newequilibrium interest rate and income? (e) Suppose that the money supply is raised from 1,000 to 1,200. What are the newequilibrium interest rate and national income? (f) How will fiscal expansion in the country (Macro-land) affect national income,employment, interest rate, price level and real money balance under the Keynesianaggregate supply condition? NB: Kindly answer all questionsCOURSE: MACROECONOMICS - IS-LM MODEL Analyze and plot IN DETAIL the effect on the money market caused by an increase in the sensitivity of money demand to the level of income (i.e. "k*Y" in the equation of the money Market L = k*Y - h*i). Then, explain and plot how the equilibrium changes in the IS-LM model.
