Please explain Question 1 (a) (b) (c) Precisely without confusion. Q1: AD-AS ModelBased on Abel, Bernanke and Croushore, 10th edition, Chapter 9, Numerical Problems, No. 5.Consider the following eeonomy:• Desired consumption= 1275 + 0.5(Y – T) – 200r.(1)• Desired invest mentId = 900 – 200r(2)• Real money demandL = 0.5Y – 200i(3)Full employment out put Y = 4600 and expected inflation is a = 0.(a) Suppose that T= G= 450 and that M = 9000.• Find an equation describing the IS curve.HINT: Set desired national saving and investment exqual; salve for relatkonship between r and Y• Find an equation describing the LM curve.[HINT: Set real money supply and demmand equal; solve for relatkonship between rand Y, given P.• Finally, find an equation for the aggregate demand curve.HINT: Use the IS and LM expuatiıns to find a relationship between Y and P.ECON102(b) Calculate the general equilibrium values of output, consumption, investment, the realinterest rate, and price level.(c) Suppose that T = G = 450 and that M = 4500. What is the equation for the aggregatedemand curve now? What are the general equilibrium values of output, consumption,invest ment, the real interest rate, and price level? Assume that full employment outputY is fixed.

(a) (i) In goods market, Y = Cd + Id + G Y = 1275 + 0.5(Y - 450) - 200r + 900 - 200r + 450 Y = 2625…

Q1: AD-AS Model Basad on Abel, Bernanke and Croushore, 10th edition, Chapter 9. Numerical Problems, No. 5. Consider the following economy: • Desired consumption c = 1275 + 0.5(Y – T) – 200r. (1) • Desired invest ment 1d = 900 – 200r (2) Real money dem and L = 0.5Y – 200i (3) Full employment out put Y = 4600 and expected inflation is = 0. (a) Suppose that T=G = 450 and that M = 9000. • Find an equation describing the IS curve. HINT: Set desired national saving and investament equal; salve for selatinship between rnd Y| Find an equation describing the LM curve. HINT: Set eal mcney supply and demand equal; salve for elationship between rand Y, givn P.| Finally, find an equation for the aggregate demand curve. HINT: Use the S nd LM equations to find a relatianship between Y and P

Q1: AD-AS Model Basad on Abel, Bernanke and Croushore, 10th edition, Chapter 9. Numerical Problems, No. 5. Consider the following economy: • Desired consumption c = 1275 + 0.5(Y – T) – 200r. (1) • Desired invest ment 1d = 900 – 200r (2) Real money dem and L = 0.5Y – 200i (3) Full employment out put Y = 4600 and expected inflation is = 0. (a) Suppose that T=G = 450 and that M = 9000. • Find an equation describing the IS curve. HINT: Set desired national saving and investament equal; salve for selatinship between rnd Y| Find an equation describing the LM curve. HINT: Set eal mcney supply and demand equal; salve for elationship between rand Y, givn P.| Finally, find an equation for the aggregate demand curve. HINT: Use the S nd LM equations to find a relatianship between Y and P

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter17: Capital And Time

Section: Chapter Questions

Problem 17.2P

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