(1) Suppose that the demand for real money balances depends on the interest rate, r, and on disposable income Y - T; in other words, suppose that the correct way to write the LM equation is M/PL(r,Y-T). With this change to the IS- LM model, can you tell whether a tax cut increases or decreases output in a closed economy? Illustrate graphically the short-run effects on interest rate and output. Be sure to label: i) the axes, ii) the curves, iii) the initial equilibrium values; iv) the direction the curves shift; and v) the terminal equilibrium values.

Consider the following Keynesian small open economy: c = 50 +0.63Y d = 80 - 500r G = 40 NX = 100 -0.13Y -e e 70 M= 120 L-0.5Y - 300r P- 300 In this economy, the real interest rate does not deviate from the foreign interest rate. Note that if this economy is in general equilibrium, the value of the Interest rate r is 0.1 and the price level is P=1. C. Assuming fiexible exchange rates and a fixed domestic price level, if the foreign interest rate increases by 0,06, then domestic output becomes (Type an integer or a decimal rounded to two decimal places as needed.)

Assume the following IS-LM model:           expenditure sector:                                 money sector:          AD  =  C + I + G + NX         I      = 300 - 20i                  M   = 700           C    =  100 + (4/5)YD           G    = 120                          P    = 2          YD  =  Y - TA                       NX  = -20             md  = (1/3)Y + 200 - 10i          TA  =  (1/4)Y           How much investment (I) will be crowded out if the government increases its purchases by deltaG = 160 and nominal money supply (M) remains unchanged?

Consider the following economy: Labor supply: Nt= 90 Capital stock: Kt = 90 Government spending: Gt = 20 Tax collections: Tt = 20 Production function: Yt = 2(Kt)0.5 (Nt)0.5 Real money demand Lt = 2Yt - 200rt Consumption function: Ct = 16 + 0.8(Yd)t Domestic price level: Pt = 4 Investment function: It = 25 - 50rt Nominal money supply: Mt = 1296 Plot (a)-(d) on the IS-LM and AD-SRAS-LRAS diagrams. Make sure to label (i) the axes, (ii) the curves and (iii) the initial equilibrium levels.

subquestions a and b. * for a) - need to find the IS equation, also the LM equation and the equilibrium.

In this question, we assume Canada is a closed economy and is in its long-run equilibrium. TransCanada announced that they will not proceed with the East Energy pipeline in October 2017. According to the long-run classical model, what happens to the equilibrium levels of output, real interest rate, and investment in Canada after TransCanada made this announcement? What happens to the real wage in Canada? Explain your answer with the aid of TWOdiagrams - one for the loanable funds market and one for the labour market.

I need help with this question

Use the IS-LM model to answer this question. Suppose there is a simultaneous increase in taxes and reduction in the money supply. Explain what effect this particular policy mix will have on output and the interest rate. Based on your analysis, do we know with certainty what effect this policy mix will have on investment? Explain.

An economy is described by the following equations: C = 2,600+ 0.8 (Y- T) - 10,000r IP = 2,000 10,000r G = 1,800 NX = 0 T = 3,000 The real interest rate, expressed as a decimal, is 0.10 (that is, 10 percent). a. Find a numerical equation relating planned aggregate expenditure to output. Instructions: Enter your response for mpc rounded to one decimal place. PAE=+ 0.8 Y b. Using a table (or algebra if you have used the appendix to this chapter), solve for short-run equilibrium output. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Leave no cells blank. You must enter 'zero' for the answer to grade correctly. Output Y 9,500 9,600 9,700 9,800 9,900 10,000 10,100 10,200 Planned aggregate expenditure (PAE) Short-run equilibrium output: Y PAE

Assume that the long-run level of output is Y = 1000, which the economy is also at initially in the short-run. Suppose that the consumption and investment functions are, respectivley, C = 100 + 0.8(Y – Ť), 1- 100— 2000г, that is, MPC is 0.8. Furthermore, the LM (money market equilibrium) curve is M. 200 The government is currently implementing a policy G = 80, Ť = 50, and the central bank (CB) is supplying M = 1000. Expected inflation is T° = 0. Continuing from Part 1, due to the uncertainty surrounding the coronavirus, consumers tighten their belts and consumption function changes to C = 40 + 0.8(Y – T). Focus only on the economy's short-run responses, that is, when the price level P cannot adjust. Derive the new IS curve. It should be written in the form Y = A - Bi, that is, you only need to solve for the values of A = and