Suppose we start with a general equilibrium, and the economy experience an improvement in payment technology. Which of the following statements correctly describes the difference between the initial general equilibrium and the final general equilibrium  1. the real interest rate is greater under the final equilibrium 2. the real interest rate is smaller under the final equilibrium 3. the real interst range does not change under the final equilibrium 4. None of the above

Q: Use the classical general equilibrium model WITH INVESTMENT and GRAPHICAL ANALYSIS to discuss the…

A:

Q: an economy is currently operating at point A. What key policy recommendations would you make for an…

A: Contractionary monetary policy is the policy by which the monetary authority contract the money…

Q: Starting from general equilibrium, what would be the long-run effects of a simultaneous reduction in…

A: We can take a standard IS-LM framework to understand the economic activities.  In an equilibrium,…

Q: What variable allows our macroeconomic model to automatically adjust GDP back to full employment…

A: Equilibrium GDP in short-run occurs at the intersection point of AD and SRAS If actual GDP <full…

Q: Suppose we start with a general equilibrium, and there is a decrease in the effective tax rate on…

A: Reduction of taxes on capital will ensure greater availability of capital in the economy in short…

Q: Consider a closed economy. The introduction of new technology and an increase in the marginal…

A: Aggregate demand (AD) is the downward sloping curve indicating an inverse relationship between the…

Q: Consider the economy of Ghana. The consumption function is given by C = 400 + 0.8(Y - T). The…

A: Given, C= 400+0.8(Y−T) I= 600−70r Government Purchase = 400  Government has a balanced budget,…

Q: The following equations describe a certain economy C = 400 + 0 . 75 Y d → consumption function I =…

A: GDP is known as the gross domestic product of any economy. GDP is the value of all final goods and…

Q: ession and characterized by high unemployment. Hayek and Keynes who are notable in this field have…

A: The saving rate presents a trade-off between current and future level of consumption.It is the ratio…

Q: Consider the economy of Ghana. The consumption function is given by C = 400 + 0.8(Y - T). The…

A: Note:- Since we can only answer up to three subparts, we'll answer first three. Please repost the…

Q: Assume that nominal wages are sticky and that firms determine the level of employment in the short…

A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…

Q: QUESTION 4 Neverland is a closed economy that severed all links to the outside world. Its economy…

A:

Q: Considering the goods market of the following closed economy - the economy is not necessarily in…

A: In macroeconomics, aggregate demand orefers to the total demand for final goods and services in an…

Q: Between 2020 and 2022, property prices across Australia have increased by 30% on average. This has…

A: Gross Domestic Product refers to the value of the total output that a country produces during a…

Q: What occurs in the labor market when the real wage rate is above the​ full-employment equilibrium​…

A: When the real wage would be higher than the full employment level, there will be an excess supply of…

Q: Suppose the real interest rate is 3%. In a closed economy, an increase in national savings, all else…

A: In an economy, changes in national savings will have a significant impact on real interest rate…

Q: Which of the following decreases in response to the interest-rate effect from an increase in the…

A: If price level increases, inorder to control it, interest rate increases so that money in…

Q: Consider the closed-economy market-clearing model. Assume that the marginal propensity to consume is…

A: Here, it is given that the given economy is the closed economy with the MPC of 0.8.

Q: Within a two-period intertemporal choice setting, a consumer chooses to be a saver at an initial…

A: The customer is a saver and the real interest rate has now risen, the customer will now receive a…

Q: Suppose Bank of England is considering using the tool of cutting interest rates to boost household…

A: Hi! Thank you for the question, As per the honor code, we are allowed to answer three sub-parts at a…

Q: Within the IS-LM curve model, if the government cut taxes at the same time that there was an…

A: In the IS-LM model, IS curve explains the situation of the goods or product market, while LM curve…

Q: In this question, we assume Canada is a closed economy and is in its long-run equilibrium.…

A: Meaning of IS-LM Curve: The term IS-LM curve refers to the combination between market goods and…

Q: Suppose we start with a general equilibrium, and the economy experience an improvement in payment…

A: In general equilibrium, when the economy experienced an improvement in payment technology which will…

Q: will a reduction in the real interest rate increase investment spending, other things equal? Why is…

A: ‘Real interest rate(r)’ is referred to a rate that is adjusted to eliminate the inflation effect.…

Q: The following equations describe a Keynesian model of a closed economy:         C = 500 - 0.5(Y -…

A: C = 500 - 0.5(Y - T) - 100r I = 350 - 100r L = 0.5Y - 200i πe = 0.05 G = T = 200 Y = 1850 M = 3560

Q: This discussion is a continuation of the concept that in the goods market savings is equal to…

A: Introduction- In a closed economy, the equilibrium condition in the market for goods is that…

Q: Explain two of the channels through which lower interest rates stimulate consumption by households

A: The transmission of monetary policy is the process by which changes in the Reserve Bank's monetary…

Q: Consider the an economy described by the following equations Y = C+I+G C=Co+MPC YD I=d-e.r YD=Y-T…

A: For an economy, a macroeconomic model can be computed by putting together all these endogenous…

Q: "Suppose an economy with output at the natural level and there is an increase in consumer…

A: Meaning of Disposable Income: Here, the term disposable income reflects the income level saved by…

Q: In the short run, the increase in consumption spending associated with the stock market expansion…

A: A stock market is a market place where stocks of companies are traded, including securities listed…

Q: Consider an economy described by the following equations: Y = C + I + G Y = 5,000 G = 1,000 T =…

A: Interest rate: It is the rate that is charged by a lender of money or credit to the borrower.

Q: Explain the circular-flow model of the economy in terms of resource and monetary flows. Discuss the…

A: The economies around the world work upon the basis of the allocation of resources, which are present…

Q: Suppose we start with a general equilibrium, and the economy experience an improvement in payment…

A: In general equilibrium, when the economy experienced an improvement in payment technology which will…

Q: c. Suppose instead that the money supply is increased from 3,000 to 3,500. What are the new…

A: The above given economy is an ISLM model, which shows the equilibrium of product market and money…

Q: What are the effects of an increase in the real interest rate on consumption in each period, and on…

A: In the two period model, a change in real interest rate will affect the savings and consumption…

Q: We have an economy with two major sectors: Sector I produces the means of production, and Sector II…

A: Given that an economy has two major sectors. Sector I= production Sector II= consumption Constant…

Q: Keynes stipulated that there are two determinants of investment. They are A,B,C, OR D ONE ANSWER A…

A: Savings- Investment determinants are key assumptions or building blocks of Keynesian study of…

Q: The U.S. economy is initially in short-run macro-equilibrium.  Assume that the Federal Reserve…

A: Since the U.S. economy is initially in short-run macro-equilibrium the Federal Reserve lowers the…

Q: Explain how an increase in government expenditure can affect the goods market and money market by…

A: Government spending refers to the expenditures of the government including consumption, investment,…

Q: Starting with AD1 and AS1 in the graph below, an increase in capital stock would mean the: AS1 AS 2…

A: An increase in capital stock means , the business sector adds a sizable quantity of factories,…

Q: Explain what the consumption function shows, and describe what is held constant along the…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…