Price Level a d 1 M 1 1 1 T LAS T 1 1 Reference. Figure 9-16 1 B Q, Qo Real Output SAS, SAS Refer to the graph above. Assume the economy is initially at point B. The graph correctly demonstrates an economy moving to point C if: O the government decreases the money supply. O productivity increases by less than the increase in wages. O a country's exchange rate appreciates (gains value). wages rise by less than the increase in productivity.

Price Level a d 1 M 1 1 1 T LAS T 1 1 Reference. Figure 9-16 1 B Q, Qo Real Output SAS, SAS Refer to the graph above. Assume the economy is initially at point B. The graph correctly demonstrates an economy moving to point C if: O the government decreases the money supply. O productivity increases by less than the increase in wages. O a country's exchange rate appreciates (gains value). wages rise by less than the increase in productivity.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Imagine that the U.S. economy finds itself in the followingsituation:agovernmentbudgetdeficitof$100 billion, total domestic savings of $1,500 billion, and total domestic physical capital investment of $1,600 billion.Accordingtothenationalsavingandinvestment identity,whatwillbethecurrentaccountbalance?What willbethecurrentaccountbalanceifinvestmentrisesby $50billion,whilethebudgetdeficitandnationalsavings remain the same?
Please no written by hand and no emage Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands for net taxes: C=40+0.5*(Y-T) Suppose G= 165 billion, I=50 billion, and T=10 billion. Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+GY=C+I+G, the equilibrium output level is equal to _____ billion. Suppose the government purchases are increased by $100 billion. The new equilibrium level of output will be equal to _____ billion. Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to _____.
Assume 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 photo
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Consider the following open economy model:C = CO + cYDYD= YI= I0. brNX = No - n¡Y + n2Yf + n3RM/P-Mo+mOY-mp.where AD = C + I + Go + NXDerive the multipliers for the closed and open economy and make relevant comparison betweenthem.What is the impact of Mo and Go on the equilibrium value of R. That is, discuss the role ofmonetary policy and fiscal policy on the real exchange rate.Suppose that country A is a small open economy. Discuss the following effects by the help ofrelevant figures. Discuss by your own words explicitly and briefly.(a) Contractionary Monetary Policy under fixed exchange rate regime and perfect capitalmobility.(b)Contractionary Fiscal Policy under flexible exchange rate regime and without capitalmobility.(c)Expansionary Monetary Policy under fixed exchange rate regime and imperfect capitalmobility if interest rates are more sensitive to the capital flows.(d)Expansionary Fiscal Policyunder flexible exchange rate regime and perfect capital mobility.
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6. In the exchange rate model in Example 7.2, supposethe company continues to manufacture its product inthe United States, but now it sells its product in theUnited States, the United Kingdom, and possibly othercountries. The company can independently set its pricein each country where it sells. For example, the pricecould be $150 in the United States and £110 in theUnited Kingdom. You can assume that the demandfunction in each country is of the constant elasticityform, each with its own parameters. The question iswhether the company can use Solver independently ineach country to find the optimal price in this country.(You should be able to answer this question withoutactually running any Solver model(s), but you mightwant to experiment, just to verify your reasoning.)
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Suppose there is a reduction in foreign output, Y*. This reduction in Y* will cause which of the following in the domestic country?a reduction in outputa reduction in consumptiona reduction in net exportsall of the abovenone of the above
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Please no written by hand solution Consider the following economic situations:C = $4.0 trillionI = $1.5 trillionG = $3.0 trillionT = $3.0 trillionNX = $1.0 trillionF = 0mpc = 0.8d = 0.35x = 0.15r = 1% λ = 0.5A. Calculate an expression for the IS, MP and AD curves ( r= ?, IS Y= ?, AD Y=?)B. Let AS curve be given by the relation: π = 6 + 1.5 (Y - 25.5) (i.e. the price shock is zero). What are the equilibrium values of inflation, output and the real interest rate(π, Y, r)?C. Suppose government purchases are raised from $3.0 trillion to $3.5 trillion. What are new short-run equilibrium inflation values, output and the real interest rate (π, Y, r}?D. Suppose a financial crisis begins, and ƒ increases ƒ = 3. (Assume government purchases are again as in part (a). What are the new short-run equilibrium values of inflation, output, and the interest rate (π, Y, r}?(Please solve all the parts with numerical steps so it could be practiced easily)