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Macroeconomics
4th Edition
ISBN: 9780393602487
Author: Jones, Charles I.
Publisher: W. W. Norton & Company
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Chapter 11, Problem 5RQ
To determine
The micro-foundations of the IS curve.
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- Natural disasters: Suppose a large earthquake destroys many houses and build-ings on the West Coast but fortunately results in little loss of life. Show how to think about this event using the IS curve.arrow_forwardIn the set of the IS curve analysis, which of the following is an endogenous variable? Investment quantity Real interest rate Nominal interest rate Money supply quantityarrow_forwardName and discuss the factors that shift the IS Curve. Give two examples, with the help of a diagram, of IS curve shifting, one to the left and one to the right.arrow_forward
- 1. Which of the following equations is the correct expression of the IS curve? ao+Bo-B₁i+G a. Y = b. Y= C. d. Y= 1-α₁ (1-t) C+I+G Y = 1-a₁ (1-1) ao+Bo-B₁i+G 1+α₁ (1-t) C+I+G 1+a₁ (1-1)arrow_forwardWhat is a probit model?arrow_forward6. Derive the functional form of the IS curve for the following economy: [Hint: Use the equilib- rium condition and isolate Y on LHS and all other terms on RHS, i.e., Y = ISo + IS1(r)] C = C, + C(Y – T),G = Ğ,I = I, – I,(r),T = Tarrow_forward
- How do changes in consumer spending patterns impact the accuracy of short-term economic forecasting models?arrow_forwardThis is an intermediate macroeconomics subject question. Please explain clearly.arrow_forwardExplain whether each of the following is an example of a macroeconomic concern or a microeconomic concern. 1. Ford Motor Company is contemplating increasing the production of full-size SUVS based on projected future consumer demand 2. Congress is debating the option of implementing a value added tax as a means to cut the federal deficit. 3. The Federal Reserve announces it is increasing the discount rate in an attempt to slow the rate of inflation. 4. The Bureau of Labor Statistics projects a 22.5 percent increase in the number or workers in the healthcare industry from 2008 to 2018.arrow_forward
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