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 consumptionand investment functions are, respectivley,C = 100 + 0.8(Y – T), I= 100 – 2000r,that is, MPC is 0.8. Furthermore, the LM (money market equilibrium) curve is200The government is currently implementing a policy= 80,T = 50,and the central bank (CB) is supplying M = 1000.Expected inflation is a = 0.Continuing from Part 1, due to the uncertainty surrounding the coronavirus, consumers tighten their belts and consumption functionchanges toC = 40 + 0.8(Y – Ť).Focus only on the economy's short-run responses, that is, when the price level P cannot adjust.Fill in the following table for the new values of the nominal interest rate, short-run output, consumption, and investment after the Covidconsumption shock.I*

IS curve shows the relationship between interest rate and the level of output where goods market is…

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 consumpti and investment functions are, respectivley, C = 100 + 0.8(Y – T), I = 100 – 2000r, that is, MPC is 0.8. Furthermore, the LM (money market equilibrium) curve is 200 The government is currently implementing a policy Ĝ = 80, Ť = 50, and the central bank (CB) is supplying M = 1000. Expected inflation is = 0. Continuing from Part 1, due to the uncertainty surrounding the coronavirus, consumers tighten their belts and consumption functi 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. Fill in the following table for the new values of the nominal interest rate, short-run output, consumption, and investment after the Cov consumption shock. C* I'

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 consumpti and investment functions are, respectivley, C = 100 + 0.8(Y – T), I = 100 – 2000r, that is, MPC is 0.8. Furthermore, the LM (money market equilibrium) curve is 200 The government is currently implementing a policy Ĝ = 80, Ť = 50, and the central bank (CB) is supplying M = 1000. Expected inflation is = 0. Continuing from Part 1, due to the uncertainty surrounding the coronavirus, consumers tighten their belts and consumption functi 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. Fill in the following table for the new values of the nominal interest rate, short-run output, consumption, and investment after the Cov consumption shock. C* I'

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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