Suppose the Government wishes to reduce the budget deficit by reducing public spending. (a) Assuming that the monetary authorities hold the money supply constant, explain why the decrease in government spending reduces output more in the Keynesian-cross model than in the IS-LM model.
Q: A manufacturer estimates marginal revenue to be 1 R'(q) = 100q 2 per unit when the level of…
A: Marginal profit is the profit change due to change in one or more units of production or we can say…
Q: How will the changes in the market affect the FIRM represented in Table 5-1 in Question 8 in the…
A: We know that in the long run, each firm earns zero economic profit or just normal profit. So…
Q: How, specifically, can customers evaluate the search qualities, experience qualities, and credence…
A: MBSC want to attract loyal customers. MBSC wants to provide amazing customers engagement, state of…
Q: Economics In 2020 there was a sudden drop of market liquidity when lockdowns were first declared.…
A: During the era of year 2000 the return from the treasury bonds were low and at that time the…
Q: 3. Consumer Optimization Utility Function: U = In (x) + 2*In (y) Budget Constraint: 50 = x + 2y Find…
A: A budget constraint addresses every one of the mixes of goods and services that a buyer might buy…
Q: Are you able to assist me with the last two questions?
A: The Gini coefficient determines income distribution across a population. Created by the Italian…
Q: Questions: (1) How much is the income elasticity of chicken consumption, and how much is the…
A: Consumption of chicken is regressed on real income, price of chicken and price of beef.
Q: Consider the bicycle market- determine whether the events listed below cause a movement along or a…
A: In the bicycle market, any change in demand or supply factors will lead to shift or move the demand…
Q: GDP deflator in 2011 and in 2012 from the preceding year.
A:
Q: Consider the following mutually exclusive alternatives: Alternative A Alternative B $1,114,000…
A: Given:- Capital investment of Alternative A=$473,000Capital investment of Alternative…
Q: TRUE OR FALSE Inflation, growth, and unemployment all have defined cyclical pattern
A: Over many years, a cyclical pattern repeats with considerable regularity.Cyclical patterns vary from…
Q: The slope of the total revenue curve for a competitive firm is equal to __________, which is equal…
A: While a firm in a perfectly competitive market has no impact on its cost, it decides the result it…
Q: What is meant by form utility?
A: Utility is an economic term which refers to satisfaction.
Q: Assume Morocco is currently operating with an unemployment rate six percent above its natural rate…
A: Unemployment Rate The unemployment rate in the economy shows the rate of the labor force that is…
Q: Why do banks choose to securitise their assets? Explain how securitisation may exacerbate the…
A: Answer - Securities :- These are a financial instrument which has non-negotiable and has…
Q: For a perfectly competitive firm, profit maximization happens at: A. P=MC B. AR=MC C. MR = ATC D. MR…
A: A perfectly competitive market is the special type of market where a single firm cannot influence…
Q: Suppose a firm is considering to buy a machine today at $25,000. The use of this machine in the…
A: cost 25000 Income 15000 r 0.1
Q: 4. Suppose an economy is described by the aggregate demand curve: M Y = 2000 +1.25 * G+2.5* P If Y*…
A: Potential GDP = 6000 for given G=1200 and P=1 Y is a function of G, P and M
Q: question one What strategies and tactics can be employed during negotiation, and when or why will…
A: Features of negotiation: 1. Any negotiation requires the presence of at least two parties. Both…
Q: Explain the statement: “Developing countries tend to exhibit symptoms of both market failure and…
A: Developing country is a type of economy which has low level of industrialization, which is…
Q: Espinoza has $1,000 in cash, he deposits the total amount in Legion Banc. How much can LegionBanc…
A: In the banking sector, when an individual deposited his money, the proportion of this money is used…
Q: What is the advantages and disadvantages of machination of progress?
A: The term "machination of progress" is used to describe globalization and technological progress.…
Q: Question 1 Which of the following characteristics is required for a perfectly competitive market?…
A: In a perfectly competitive market, no one has the market power to determine the price of the…
Q: Hazel is thinking of making some of her operations sustainable. Construct some ideas that she might…
A: Hazel can perform the lawn service herself, saving money on hiring personnel.
Q: positive turbulence-causing factors during the next five years healthcare in malaysia
A: There are several sources of turbulence in the health-care and medical businesses. They are…
Q: Identify a minimum of 5 features/tools that are offered.
A: The State of Ohio offers a wide range of profession openings. A vocation in broad daylight…
Q: How does amortization help in making loans affordable?
A: loan amortization is the method involved in planning out a fixed-rate advance into equivalent…
Q: O Lifeless firms would continue to operate, generating profits followed by defaulting on the Firms…
A: ANS 2 Option(a) Lifeless firms would continue to operate, generating profits followed by defaulting…
Q: What is the cost-effective solution for abatement of toxins by firms All firms should abate until…
A: Since, the cost effective solution for the abatement of toxins by firms means how the firms adjust…
Q: The government decides that a specific scarce good should be provided for everyone who wants it at…
A: "When government sets the price below the market price it represents a price ceiling."
Q: Suppose in an economy with a tariff on the import of sugar, if the domestic demand for sugar…
A: Given
Q: A. Articulate a defensible claim or thesis that responds to the prompt and establishes a line of…
A: Measures taken by the government to alter market conditions are referred to as fiscal policy…
Q: The Federal Open Market Committee of the Federal Reserve (the Fed) announced a rate hike of half a…
A: IS-LM In the IS LM curves of equilibrium, (IS) is the goods market and (LM) is the money market.…
Q: If non-chequable savings accounts are equal to R216 600, M1A equals R560 000, cheques, transmission…
A: The money market deposit account can be calculated by calculating the value of the M2 measure of…
Q: The market demand curve is given by P = 40 - 0.2Q. What is the profit-maximizing output? A. Profit…
A: In Economics, Total Revenue is the product of the inverse demand function ,Price (P), and Quantity…
Q: Circular Flow Chart Quiz Fill in the 6 BLANK spots using the following 5 options: Product Markets…
A: The circular flow model demonstrates how money moves through an economy. It shows the basic economic…
Q: Question 8 Table 5-1 below shows the price and cost information for a firm that operates in a…
A: "In a perfectly competitive market there are many firms and consumers. Firms produce similar…
Q: The newly-formed kingdom of Monkeytown is attempting to create their first currency. Many…
A: Money can be understood as something which is declared legal tender by the central authority and act…
Q: What is inflation ? Briefly explain the costs of inflation . Use your outlined cost of inflation…
A: The expenses that are being incurred for carrying out day to day transactions of a business or…
Q: how to calculate and interpret the following elasticities : oElasticity of the cost of living with…
A: Elasticity is a proportion of a variable's aversion to an adjustment of another variable, most…
Q: Q10 needed Q8 pic is just for reference Question 10 Refer to Table 5-1 and the firm in Question 8,…
A: In perfect competition, eqm Q(quantity) is found by the intersection of MC(marginal cost) and…
Q: 5. A used machine costs $20,000 to purchase. It has an annual maintenance cost of $20,000, a salvage…
A: Initial cost = $20,000 Annual maintenance cost = $20,000 Salvage Value = $5,000 n = 10 years i = 10%
Q: Statement: Under certain economic conditions (or, after certain economic shocks that move the…
A: The aggregate supply is the total amount of services and commodities that firms in an economic plan…
Q: f an insured purchases an Annuily from which income is received, the insured is the receiver…
A: Answer is given below
Q: A) supply is inelastic and demand is elastic. B) supply is elastic and demand is elastic. C) supply…
A: Question 7 The answer is - D) Cannot arise on a market with perfect competition
Q: What are two great that the Fed deals with in the short run? macroeconomic problems
A: Macroeconomic Problems arise when the economy doesn't sufficiently achieve the goals of full…
Q: 1. Suppose the production function for automobiles is given by q = kl-0.8k² -0.21² where q…
A: “Since you have posted multiple questions with multiple sub-parts, we will solve the first question…
Q: How Product Differentiation of Food and Beverages affect the economic of a country?? Explain.
A: Product differentiation is a marketing approach used to set a company's goods or services apart from…
Q: Question 10 An increase in demand in an industry prompts new firms to enter the market. When the…
A: An industry is a collection of businesses that are linked by their core business activity.There are…
Q: venues Revenues m sales from sales penses Expenses Wages Wages (to foreign workers) rkers) Steel…
A: *Answer: .Answer GDP = It is the sum of all the products and services produced in a country in…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
- Suppose that the government wants to raise investment but keep output constant. According to the IS-LM model, what mix of monetary and fiscal policy will achieve this goal? Explain your policy recommendations. Illustrate your policy bundle in the IS-LM model.Explain and illustrate the following: a) Construct one IS-LM model and illustrate using arrows the effects of the following on Y and I when: Government increases government spending, other factors constant. Show the crowding out effect.b) Construct one IS-LM model and illustrate using arrows the effects of the following on Y and I when: Central Bank conducts an open market purchase of government bonds. Describe the transmission mechanism of monetary policy.c. Use the loanable funds market to illustrate graphically how an increase in net capital outflow will affect domestic interest rates and investment. Briefly explain your illustration.In the IS/LM model explain what happens to equilibrium output and interest rate if government simultaneously pursues expansionary fiscal policy and the central bank opts for a contradictionary monetary policy. Show with the help of a graph along with a very brief verbal explanation.
- Apply the Keynesian IS-LM model. Suppose the government reduces its spending but the central bank responds to keep income constant. a) Draw a graph to illustrate the change in equilibrium. b) State whether each of the following variable will increase, decrease, or not change: interest rate, consumption, investment, and money supply. c) Explain how the interaction between fiscal policy and monetary policy kept income constant.Consider the following closed economy in the context of the IS-LM model. The consumption function (C), the investment function (I), government purchases (G), taxes (T), the money demand function (MD), money supply (M) and the price level (P) are given as: C = 500 + 0.75(Y - T)I = 1000 - 300?G = 1000T = 1200MD = 0.5Y - 200rM = 5000P = 2 (a) Write down the equations for the IS curve and LM curve. Show your workings. (b) Solve for the short-run equilibrium output and interest rate. (c) Suppose government purchases falls, with ΔG=-175. (i) Using the Keynesian cross model, calculate the change in equilibrium output. (Hint: Use the government purchases multiplier.) (ii) Would your answer be the same if you calculate the change in equilibrium output using the IS-LM model? Briefly explain your answer. (e) Suppose the price level falls. Using an appropriate IS-LM diagram, illustrate the short-run impact of the fall in price level on the equilibrium interest rate and output. No written…Question 2 Adapted from a past exam question In the great southern city of Picenium, the government runs a contractionary fiscal policy, and the central bank runs an expansionary monetary policy. Using an IS/LM model, explain the combined effect that this contractionary fiscal policy (assume G decreases, but T is constant) and expansionary monetary policy have on the economy. Be sure to explain all the underlying mechanisms, and if output and interest rates are higher/lower or indeterminate after the changes in policies.
- (a) Using a basic Keynesian income determination model, describe the effects of the following changes, assuming that money demand is infinitely elastic: (i) an increase in government expenditure (ii) an increase in the marginal propensity to save (iii) a decrease in export demand (iv) an increase in the marginal propensity to import (v) a cut in the official rate of interest by the Monetary Policy Committee of the Bank of England Illustrate your answers with diagrams.Consider the monetary intertemporal model. Payments can be made with either credit cards or with money, and we denote the amount of transactions in real terms with credit cards as X. The bank is willing to supply credit card services as a function of Xs(q) where q is the cost per unit of credit. The money supply is given by Ms and the goods market and the labour market are as we described in the real intertemporal model Assume that the government introduces a tax on credit card services. That is, if a consumer or a firm holds a credit card balance of X, they are taxed tX where t is the tax rate. Determine the effects on the equilibriums price and the quantity of credit card services, the demand for money, and the price levelA) Suppose that the economy has a recessionary gap. Use the Keynesian transmission mechanism to explain fully how the Bank of Canada can use an easy money policy to remove the recessionary gap. Assume a closed economy. Illustrate your answer with graphs. B) An easy money policy was deemed to be very ineffective by Keynes. Provide three reasons why Keynes felt that an easy money policy may be ineffective. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Using the IS-LM model and assuming the central bank conducts monetary policy by manipulating the cash rate, explain the effects of:: Fiscal policy designed to offset the impact of a decrease in the marginal propensity to consume (assuming an unchanged monetary policy);Suppose the Government wishes to reduce the budget deficit by reducing public spending while holding taxes constant. Assuming that the monetary authorities hold the money supply constant, explain why the decrease in government spending affects output more in the IS model than in the IS-LM model. note: show diagrams please(a) Suppose that, in a liquidity trap, bank reserves are less liquid than government debt. If the central bank conducts an open market sale of government debt, what will be the effect on the price level? Use a diagram, explain your results. (b) Suppose that there is a decrease in the price of housing, which the central bank judges is a temporary asset price decrease. In the New Keynesian model, determine the central bank's optimal response to this asset price increase, using diagrams. (c) Suppose initially that inflation is at the central bank's target and the output gap is zero. Then, government spending goes up. Determine, with the aid of diagrams, how the degree of price stickiness affects the central bank's optimal response and explain your results.