Consider an economy that may be represented by the following short-run IS-LMmodel described by equations (1) through (6):(1) C 200+ 0.8(Y-T)(2) T = 800(3) G = 500(4) 1 700 - 25 r(5) Y=C+I+G(6) M/P = 0.6Y - 60r where the nominal money supply is M-600 and the price levelis P = 1. Suppose that the government increases its expenditures by 100 units, butthe Bank of Canada would like to maintain the interest rate constant. Then,(approximately)the money supply must decrease by 125.5 units and equilibrium outputincreases by 200 units.the money supply must decrease by 100 units and equilibrium output increases.by 250 units.the money supply must increase by 300 units and equilibrium output increasesby 500 unitsthe money supply must increase by 60 units and equilibrium output increases by100 units.

The equilibrium of the product's market serves as the basis for the IS curve. The IS curve shows the…

Consider an economy that may be represented by the following short-run IS-LM model described by equations (1) through (6): (1) C 200+ 0.8(Y-T) (2) T = 800 (3) G= 500 (4) 1 700 - 25 r (5) Y=C+I+G (6) M/P = 0.6Y - 60r where the nominal money supply is M-600 and the price level is P = 1. Suppose that the government increases its expenditures by 100 units, but the Bank of Canada would like to maintain the interest rate constant. Then, (approximately)

Consider an economy that may be represented by the following short-run IS-LM model described by equations (1) through (6): (1) C 200+ 0.8(Y-T) (2) T = 800 (3) G= 500 (4) 1 700 - 25 r (5) Y=C+I+G (6) M/P = 0.6Y - 60r where the nominal money supply is M-600 and the price level is P = 1. Suppose that the government increases its expenditures by 100 units, but the Bank of Canada would like to maintain the interest rate constant. Then, (approximately)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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