Macroeconomics (9th Edition)
9th Edition
ISBN: 9780134167398
Author: Andrew B. Abel, Ben Bernanke, Dean Croushore
Publisher: PEARSON
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Question
Chapter 10, Problem 2NP
a)
To determine
The equilibrium values of output, real interest rate,
b)
To determine
The equilibrium values of output, real interest rate, price level, consumption and investment using the IS-LM model and to determine if the money is neutral as per the given case.
c)
To determine
The equilibrium values of output, real interest rate, price level, consumption and investment using the IS-LM model and to determine if the fiscal policy is neutral as per the given case.
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When there is a problem of a delay in terms of implementation of the fiscal policy, that would be categorized as _____.
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Fiscal policy nowadays are focused on eliminating GDP gap
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When the investment accelerator is large, expansionary fiscal policy is likely to lead to a short-run increase in investment than when the investment accelerator is small.
True or False: Expansionary fiscal policy is more likely to lead to a short-run increase in investment when the interest rate sensitivity of investment is large than when it is small.
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Assume that the consumption function is given by C = 200 + 0.5(Y – T) and the investment function is I = 1,000 – 200r, where r is measured in percent, G equals 300, and T equals 200.Assume that the equilibrium in the money market may be described as M/P = 0.5Y – 100r, and M/P equals 800.
Calculate the equilibrium r and Y. Calculate the government spending multiplier.
Chapter 10 Solutions
Macroeconomics (9th Edition)
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