Consider the IS-LM model and suppose that the economy of Fantasyland can be characterised by the following relations (all units are in millions of domestic currency). Solve the numerical exercises. If necessary, round up to second decimal digit. Provide the detailed derivation for each answer and a textual description. When required to graph the model, you can - for instance - draw it by hand or using PowerPoint. C = 200 +0.25 YD I = 150 +0.25Y - 1200i T = 150 G = 250 M/P = 2Y - 6000i a. Derive the IS relation and draw it on a diagram with corresponding labels b. The central bank sets the policy rate at 5%. What is the level of real money supply when the interest rate is 5%? Draw the LM curve: is it horizontal or upward-sloping? c. Find the equilibrium level of Consumption and Investment, and verify the value you obtained for the GDP by summing up its components.

Consider the IS-LM model and suppose that the economy of Fantasyland can be characterised by the following relations (all units are in millions of domestic currency). Solve the numerical exercises. If necessary, round up to second decimal digit. Provide the detailed derivation for each answer and a textual description. When required to graph the model, you can - for instance - draw it by hand or using PowerPoint. C = 200 +0.25 YD I = 150 +0.25Y - 1200i T = 150 G = 250 M/P = 2Y - 6000i a. Derive the IS relation and draw it on a diagram with corresponding labels b. The central bank sets the policy rate at 5%. What is the level of real money supply when the interest rate is 5%? Draw the LM curve: is it horizontal or upward-sloping? c. Find the equilibrium level of Consumption and Investment, and verify the value you obtained for the GDP by summing up its components.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter5: Business And Economic Forecasting

Section: Chapter Questions

Problem 1.4CE

See similar textbooks

Similar questions

A country's growth rate (the percentage change in output) between 2000 and 2002 was 11%, and the growth rate between 2000 and 2001 was 7%, what was the country's growth rate between 2001 and 20027 Solve the problem by first formulating an equation(s). Please, enter the answer in (with two decimal points) and UPLOAD your work and final answer in the next question.
Use graphical method to solve the following LPP: Maximise Z = x +4y Subject to the constraints: x + y < 1 2x + 2y 2 4 *2 0, y 2 0
Consider the two-sector macroeconomic model of a fictitious country: dy dt C = 0.5 Y + 540 I = 425 Where C = consumption; I = investment and Y = national income. = 0.034(C+I - 0.6 Y) Determine the following: (a) If Y(0) = 14,000, find an expression for Y (t) by solving the differential equation. (b) Find the time taken for income to fall to 13,000. (c) Is the system stable or unstable? Explain your answer.
If the annual rate of world oil consumption t years after 1970 is modeledby the equation R(t) = 16.1e^.07t (billions of barrels per year), how much total oil (net change) was used between 1976 and 1980?
(1.4) Consider the following IS-LM model: I Y=C+I+G C=100+0.4(Y-T) I= 150 +0.2Y - 4,000r r = 0.01 with G = 200 and T = 100. (a) Derive the IS curve and draw it in an appropriate diagram. (b) Calculate the equilibrium values of Y, C, I and r. (c) What is the impact of decreasing government spending to G' = 180 in terms of the new equilibrium value Y"? (d) Suppose the central bank decides it wants to counteract the restrictive fiscal policy. What exactly (i.e. we look for graphical and numerical answers) can the central bank do in order to keep equilibrium output at the value obtained for Y in (b)?
1. Suppose that we are interested in measuring the relationship between hourly wage and output productivity in the U.S economy. Variables hrwage(t) and outphr(t) denote the average hourly wage and output productivity in the U.S economy for year t. We start by estimating the model specification shown in equation (1) below: log(hrwage) = Bo + B₁ log(outphre) + ut. where log(.) denotes the natural logarithm and ut is the error term. (a) Provide a brief interpretation of parameters 0 and 1 in (1).
Question 1 a). Draw areal symbols (circles) to represent the GNP per capital. Draw these relevent places on the world map provided. Remember to choose your scale according to the size of the paper.
I am trying to answer number 5 with the table provided. I was provided in my lesson with the equation MU1/P1=MU2/P2 but I am having trouble trying to figure out what Numbers to plug into the equation from the table.
Year Quarter Revenue Q1 4.80 Q2 4.56 2015 Q3 4.88 Q4 4.91 Q1 5.37 Q2 4.99 2016 Q3 5.24 Q4 5.71 Q1 5.73 Q2 5.29 2017 Q3 5.66 Q4 5.70 Q1 6.07 Q2 6.03 2018 Q3 6.31 Q4 6.30 Q1 6.60 Q2 6.31 2019 Q3 6.82 Q4 6.75 Q1 7.10 Q2 6.00 2020 Q3 4.20 Q4 6.20
The figure depicts the annual number of hours worked against GDP per capita in the US, France, and the Netherlands between 1870 and 2000. Which of the following is true? (OUP-U3-Q3-01) Annual hours worked 3.500 1800 3,000 1900-191 2,500 2.000 1,500 L000 1870 1,000 1929 1929 1900 19501960 FRANCE 1938 6.000 1973 1973 11.000 1973 1980 1960 1990 1995 16,000 GOP per capita 1500 2000 2000 NETHERLANDS 21,000 US 21,000 2000 1) The graph proves that workers in the US produce higher outputs than their counterparts in France or the Netherlands because they work longer hours. 2) US workers have always worked longer hours than French or Dutch workers have. 3) The Great Depression in 1929 had the effect of reducing both hours worked and output in both the US and France. 4) As GDP per capita increases, the number of hours worked continues to fall in all countries shown.
The population (in millions) of a country t years after 1800 is given by the function f(t). Use the graphs of f(t), f'(t), and f''(t) given below to answer the following questions. AY 300- Ay Ay 0.03- 3- 250- 0.02- 200- 0.01- 2- 150- 0- y=f(t) 50 100 150 200 100- 50- 1- -0.01- y=f'(t) -0.02- y=f"(t) 0- 0- -0.03- 50 100 150 200 50 100 150 200 (a) What was the population in 1925? The population in 1925 was million. (b) Approximately when was the population 50 million? The population was 50 million in the year|. (c) How fast was the population growing in 1875? The population was growing at a rate of million people per year in 1875.
state the limitations of using a cubic function with inflection point to model the side of a hill. What assumptions have been made that may affect the reasonableness of your solutions?