3) Draw the IS-MP framework and show the effect of a rise in liquidity risk in the economy. Show up happens to: a) The real interest rate -> b) The output gap c) Actual GDP d) Potential GDP-

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

a. If money supply is increased by 10, what will be the new interest rate? Round your answers to one decimal place.  Pabst:  5  Numeric ResponseEdit Unavailable. 5 correct.%    Kokanee: 6  Numeric ResponseEdit Unavailable. 6 correct.%  b. What will be the increase in investment spending as a result of this new interest rate? Pabst:  60 Numeric ResponseEdit Unavailable. 60 incorrect.   Kokanee: 50 Numeric ResponseEdit Unavailable. 50 incorrect.  c. If the multiplier is 3 in each economy, what will be the increase in GDP? Pabst:     Kokanee:   d. In which economy would monetary policy be more effective in closing a recessionary gap?   Pabst    Can you please help with B, C

If planned aggregate spending in an economy can be written as PAE = 12,000+ 0.80 Y 30,000r, and potential output equals 50,250, what real interest rate must the Federal Reserve set to bring the economy to full employment? a.5.5 percent b.7.0 percent c.4.5 percent d.6.5 percent

53. Suppose the Canadian economy had a recessionary gap. To increase the level of desired aggregate expenditure, the Bank of Canada could     increase the reserve requirements of the commercial banks.     increase its spending.     sell securities in the open market.     raise the bank rate.     reduce its target for the overnight interest rate.

For the economy described below: C = 2,800+ 0.5(YT) - 8,000r 8,000r IP = 2,000 G = 2,500 NX-0 T = 3,600 a. Suppose that potential output Y* equals 9,080. What real interest rate should the Fed set to bring the economy to full employment? You may take as a given that the multiplier for this economy is 2. Instructions: Enter all your responses as whole numbers. Real rate of interest: % b. Suppose that potential output Y' equals 7,800. What real interest rate should the Fed set to bring the economy to full employment? You may take as given that the multiplier for this economy is 2. Real rate of interest: % c. Show that the real interest rate determined in part a sets national saving equal to planned investment when the economy is at potential output. This result shows that the real interest rate must be consistent with equilibrium in the market for saving when the economy is at full employment. Planned investment P= National saving S=

Question 13 Include correctly labeled diagrams, if useful or required, In explaining your answers. A correctly labeled dl question prompts you to 'Calculate," you must show how you arrived at your final answer. Vander's economy is in short-run equilibrium with an inflationary gap of $360 billion, and the marginal propensity to save 0.1. the expected inflation rate is 2% and the natural rate of unemployment is 4% (b) Assume the government takes no policy action with regard to the state of Vander's economy. (i) What will happen to the actual rate of unemployment in the long run? Explain.(it) The flow will the long-run adjustment process be represented in the Phillips curve model? Explain. (c) Assume that instead of waiting for the long-run adjustment, the government of Vander is considering USA fiscal policy to addresses the inflationary gap of 360 billion(ii) How will the effect of the government's action in part (c)(i) be represented in the Phillips curve model(Ili) If the government…

Please do fast and solve all parts with correct answer and proper explanation

Question 1 Discuss, by means of appropriate diagrams and explanation, the Keynesian liquidity trap. Depict both the LM curve and aggregate demand (AD) curve, and explain their appearance, in the case of the liquidity trap. If you were to advise the policymakers on which action to take, what would be your advice?

(20) Assume that the economy begins in long-run equilibrium and that the federal reserve decides to use open market operations to sell bonds. Which curve shifts as a result? Group of answer choices (A) The LRAS curve (B) The SRAS curve (C) The AD curve