Answered: How does Stephanie Kelton’s explanation…

How does Stephanie Kelton’s explanation of Modern Monetary Theory4 (MMT) affect your view of government spending? Provide specific examples and describe how MMT contributes to your understanding

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter14: Macroeconomic Policy: Tradeoffs, Expectations, Credibility, And Sources Of Business Cycles

Section: Chapter Questions

Problem 5E

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SUBMISSION IS DUE ON WEDNESDAY, 4th AUGUEST 2021. EMAIL YOUR SUBMISSIONS TO: jwappiahkubi@ug.edu.gh The commodity market for a simple economy is in equilibrium and when Y = C + 1 + G. The money market is in equilibrium when the supply of money (M) equals Demand for money (Md). Demand for money composes of transaction- precautionary demand for money (Mt) and the speculative demand for money (Ms). Assume the economy is characterised by the following information. C = 4800 + 0.8Yd T = 100, | = 1900 - 75i, G = 4000, M = 5000, Mt = 0.3Yd Ms = 100 – 15i a) Derive an expression to show the IS function b) Derive the LM function c) What values of Income and Interest rate provides for both the goods market and money market equilibrium in this economy d) Sketch the IS and LM curves for this economy. e) Outline four factors that cause a shift in the IS curve. Page 1 of 1
3. What Is Monetary Policy?
The central bank of Barbados decides to pursue anexpansionary monetary policy. (i) Identify one possible action they could take. (ii) Carefully explain, in as much detail as possible, how the chosen action will impact the money market. (iii) Illustrate the overall impact of the chosen action on the money market.