With the help of an IS-LM diagram, explain the effects of a decrease in the expected future interest rate on current output, the current interest rate, current aggregate spending. (It’d be better to explain with diagram, thank you!)
Q: Consider an open economy flexible exchange rate IS-LM model with consumptio investment and net…
A: IS LM model shows the simultaneous equilibrium of goods and money market. the interaction of two…
Q: increase the corporate tax rate. b. An increase in the interest rate due to an increase in the cost…
A: By and large, planned investment is how much trading companies intend to embrace during a year. Real…
Q: 6. Suppose that when income increases from $2900 to $3250, quantity demanded changes from 210 to…
A: Income Elasticity of demand refers to the change in percentage of the demand when there is a unit…
Q: In the Solow growth model, the main obstacle to continuous growth in output per effective worker is:…
A: The Solow Development Model, an exogenous model of economic increase, examines changes in an…
Q: Use the Fundamental Theorem of Exchange and draw Edgeworth Box diagrams to show the conditions…
A: Welfare economics is founded on two main principles. A collection of fully developed markets with…
Q: the amount of cereal consumed by a member in a hotel varies directly as their number if 900k of…
A: Here, it is given that the consumption of cereal by 50 members is 900kg. To find: total number of…
Q: Fanning Corp. incurs the following annual fixed costs: Depreciation $80,000 Officers' salaries…
A: Given information: Fanning Corp. incurs the following annual fixed costs: Depreciation is $80,000…
Q: Louis is trying to decide what combination of cups and plates to buy. His budget is $12. Plates cost…
A: Utility is a term which explains and helps in the measurement of satisfaction by consumption of a…
Q: What happens on the aggregate demand curve when there is a rise in the price level which causes a…
A: Aggregate demand curve is the downward sloping curve which mea s there is inverse relationship…
Q: Country A produces GDP according to the following equation: GDP = 5 K. The country has a savings…
A: Steady state refers to state where economic variable in per capita term, no longer changes.
Q: What is the number of periods that a capital of $500 invested at a rate of 10% will rise to $3.5007
A: Future value [FV] = 35007 Present value [PV] = 500 Interest rate [r] = 10% Number of periods [n] =…
Q: C&A Fast Food has four activities in serving a customer: greet customer, take order, process order,…
A: The bottleneck activity, which has the longest processing time out of the four, will decide the…
Q: The demand for toothpaste is more than the demand for diamond earrings. Oa. elastic Ob. inelastic
A: Elasticity is a measure to calculate the responsiveness of price change and demand change and their…
Q: 5. Illustrate in appropriate diagram (change in demand or change in supply) the impact on the good…
A: Demand and Supply of goods and services depend on a lot of things. Demand depends on the price,…
Q: If the Ricardian equivalence held true, its graphical representation would show: The curve…
A: In economics, various theories are used to explain the nature or behavior of individuals when they…
Q: 5 Country A produces GDP according to the following equation: GD and has a capital stock of 12,254.…
A:
Q: 4. Explain each key ingredients. (ii) There should be willingness to buy the product.
A: Meaning of Microeconomics: The term microeconomics refers to that situation under which the…
Q: Suppose that the market demand is Qd 60-2P. Three identical firms with constant MC-2 operate in the…
A: Given, Market demand: Qd = 60 - 2PP = 30 - 0.5QMarginal cost (MC) = 2 The term "Cournot…
Q: everyone used to be poor,” then how did some ancient civilizations afford to create massive…
A: A competitive market is a design wherein no single purchaser or maker has the ability to impact the…
Q: the opportunity cost of producing cheese in the two countries, you can tell that cheese and has a…
A: Comparative advantage implies to the ability to produce goods and services at a lower opportunity…
Q: discuss the types of economic systems which exist and provide examples of countries where the…
A: A system for coordinating and distributing resources, services, and goods throughout a region or…
Q: What is a "quintile"? Provide and explain one example of how this concept is used in the discussion…
A: The first quintile represents the usual lowest fifth of the data (1 percent to 20 percent); the…
Q: A company that manufactures automatic blowdown control valves (for applications where boilers are…
A: given fixed cost = 156053 P variable cost per unit = 361 total units sold = 12,872 profit = 373367 P…
Q: 5. Monetary policy will have a large impact on output if ___________. a. the LM curve is…
A: Dear student, you have asked multiple questions in a single post. In such a case, I will be…
Q: Pulsar Plc is considering of exporting its products to the Swedish market. It expects to earn an…
A: Economic profit = Total revenue - Explicit costs - Implicit costs
Q: Suppose both the buyers and sellers expect the future price of hamburgers to increase. What will be…
A: The point of intersection of demand and supply curve is referred to be as the equilibrium point of…
Q: Analyze the use of the worlds resources to achieve sustainability and equitable distribution at the…
A: Sustainable development refers to the development of a nation without harming the environment and…
Q: Determination of Equilibrium Level of Employment by The aggregate demand price and aggregate supply…
A: The Keynesian Theory states that the equilibrium situation is typically expressed in terms of…
Q: With the help of an IS-LM diagram, explain the effects of an expected future tax increase on current…
A: A macroeconomic model called the IS-LM connects an economy's short-term production level to interest…
Q: Use the information given below to calculate the annual Economic Order Quantity The following…
A: The order amount that minimizes the overall holding costs and ordering expenses is known as the…
Q: Identify and briefly describe at least four practical difficulties of discretionary fiscal polic
A: The use of taxation and expenditure by the government to affect the economy is known as fiscal…
Q: Consider an open economy flexible exchange rate IS-LM model with consumption investment and net…
A: Given information C=550+0.5(Y-T) I=500-1000i NX=350-1000E-0.3Y E=Ee*(1+i)/(1+i*) i--- domestic…
Q: ssume that the government is implementing an expansionary fiscal policy and as a result has…
A: Fiscal policy refers to change in government expenditure and revenue(taxes) in order to achieve…
Q: A monopolist sells in two markets. The inverse demand curves in the two markets are, respectively,…
A: The profit-maximizing quantity is where marginal revenue is equal to marginal cost.
Q: . Suppose that the market demand for coffee is Pd = 15 - Qd and the market supply is PsQs-5. What is…
A: In a free market, the equilibrium price and quantity is determined by the forces of the demand and…
Q: Fiscal and monetary policy may be used to help an economy recover and get out of a slump. Explain 2…
A: Expansionary strategy is utilized to invigorate an economy during downturn or downturn by supporting…
Q: Question 2 of 3 Fill in the blanks: The owner's plan was to generate Php9M per year in sales by…
A: Net present value = Present value of benefits - Present value of costs
Q: 6) The accompanying table shows the price and yearly quantity sold of souvenir T-shirts in the town…
A: Mid-point formula for income elasticity is eM=Q2-Q1Q2+Q1/2M2-M1M2+M1/2 The formula for price…
Q: Suppose that the price of one product increases from $11 to $42. As a result, quantity demanded for…
A: Demand is the quantity of consumers who are willing and ready to purchase products at different…
Q: Discuss it in your own understanding and then give example of the following: Utility and Demand
A: The utility is the satisfaction which is derived from the consumption of goods or commodities.
Q: Indicate whether each outcome in the following table is or is not an objective of economic…
A: Economic sanctions, also known as restrictive measures, are fines imposed by one or more countries…
Q: Richard did cleaning in house and found $1000 under sofa. suppose that all Commer bank have target…
A: Deposit refers to the sum of money that individuals or customers of a bank keep in the bank for…
Q: Below are some data from the productions of milk and honey. price of quantity of price of quantity…
A: Since you have asked multiple question, we will answer first question for you. If you want any…
Q: Assume the information below to answer the following questions about the land of POGO. Assume a 2%…
A: Gross Domestic Product or GDP can be defined as the value of all the goods and services produced in…
Q: Assume MPC 0.75. If an initial fiscal restraint of $100 billion is desired, by how much must Round…
A: The measure that depicts a portion of an additional dollar being spent or consumed of income of a…
Q: ent the consumer price index. If the rate of inflation of the price nd the price index has a base…
A: *Answer: Change in price index: p. = 2+3t + 0.5it p0 =100 Consumer price index (i )= Change in…
Q: The demand and supply functions for good x and good y are given as: Q = 145-2Px + Py Q= = -45 + Px Q…
A: Introduction Demand for a commodity is the amount of a commodity that a consumer will purchase it at…
Q: How many umbrellas would be required to sell to earn an operating profit of P1, 000, 000 if the XYZ…
A: Given information; The selling price per unit of product X is 800 The variable cost per unit of…
Q: 1. Explain the Canadian Agricultural Policy, specifically outlining Government Intervention/Support…
A: Agricultural Policy A system of rules governing domestic agriculture and the importation of…
Q: The banking system has $10 million in reserves, the reserve requirement is 20 percent, and there are…
A: The money supply is affected by the reserve requirements and open market operation.
Step by step
Solved in 2 steps with 1 images
- In the IS/LM model, the fiscal policy multiplier with respect to interest rates is (α corresponds to alpha as defined in the lecture notes) αh/(h+αdk) -1/(h+αdk) k/h αk/(h+αdk) αd/(h+αdk)Assume that an economy is experiencing simultaneous equilibrium in both the product market and money market. Furthermore, assume the MPC is currently around a normal level of 0.65 and the sensitivity of real money demand to also around a normal level. Based on this information, answer the following questions: a) Using the AD-AS model and IS-LM model illustrate the impact of an expansionary fiscal policy. Label the initial points in both diagrams as A and the new points following the policy change as B.True or false? Why?"A temporary tax rise never has a significant effect on current consumption."
- Assume that an economy is experiencing simultaneous equilibrium in both the product market and money market. Furthermore, assume the MPC is currently around a normal level of 0.65 and the sensitivity of real money demand to also around a normal level. Using the AD-AS model and IS-LM model illustrate the impact of an expansionary fiscal policy. Label the initial points in both diagrams as A and the new points following the policy change as B.Comparing the simple Keynesian model with the IS-LM model, in the IS-LM model a. the balanced budget multiplier is larger. b. the government spending multiplier is larger. c. the tax multiplier is smaller. d. there is no difference between any of the multipliers.use analytic exposition and an appropriate diagram, to explain how the permanent income theory of construction reconcile the results of cross- section and time -series estimates of the Keynesian consumption function
- Consider two standard Keynesian models. In Model 1, there are two types of consumers, Type A,who have low marginal propensities to consume, and Type B, who have high marginalpropensities to consume. In Model 2, there are only Type A consumers. Then, a decrease in theexogenous taxes would lead to higher output in Model 2 than in Model 1In the IS-LM model, when the government increases government purchases, the interest rate goes up; higher interest rate results in a decrease in tax revenues known as the "crowding out effect" true or falseConsider the Aggregate expenditure model. Where:AD = C + I + G + NX where G, and NX are all autonomous.C = C + c∗(Y + T R − T A) where T A = tY with t ∈ [0, 1] is the proportional tax rate and c∗ ∈ (0, 1) is the marginal propensity to consume. In addition, investment is given by: I = I − bi where I is autonomous investment and b > 0 determines the sensitivity ofinvestment to changes in the interest rate, i. A. Using the information above, solve for the IS function. Combine all the autonomous terms into one term, A. B. In an (x, y) plane, where Y is on the horizontal axis and i is on thevertical axis, illustrate the IS curve you derived above. Make sure to explainhow you got the Y-intercept and solve for the slope. c. How does c∗ affect the slope of the IS curve? Explain your answerintuitively. d. Consider the LM curve, where the real demand for money is such that:MD/P= kY − hi where k ∈ (0, 1) represents how sensitive the demand for money is to changesin income (or the inverse of…
- The fiscal multiplier is higher in the Keynesian Cross model compared to the IS-LM model True or falseUse the following versions of the IS-LM model to answer all sections: Question: c. determine the equilibrium value of Y, if M = 2,200, P = 1, and Yp = 4000 d. Based on the results of question point c, does the government budget experience a surplus, deficit, or balance?Assume i=0%, beta=1. Consumer has income of 80 in year 1, 100 in year 2. Now suppose gov't gives consumers a free check of 10 in year 1. Suppose consumers are naive (they don't anticipate the free check is financed by borrowing from China, which needs to be paid back through more tax in period 2). Consumer believes they will consume ____ in year 2. Hint: when consumers are naive, they will believe they have 80+10=90 income in period 1, and 100 income in period 2.