Consider a closed Keynesian economy. Draw an IS-LM diagram and mark the initial point as "0". Then: (A) Assume firms become more pessimistic about the future marginal product of capital. Graph the impact in the ISLM diagram (point “A") and explain the short run effects on Y, r, and P. (B) Explain how the economy will adjust in the longer run. Determine the long run effects on Y, r, and P. Mark the equilibrium as "B". (C) Suppose central bank responds to the disturbance in (A) in a way designed to keep output at its initial level. Explain what policy action the central bank must take. Mark the resulting equilibrium as “C". Organize your answers as shown below: ISLM diagram Table with directional answers: Direction of change |(up,down, unchanged, uncertain) Part (A) Part (B) Output Real interest rate Price level [If you entered "uncertain", explain here.] (A) Explain: (B) Explain: (C) Policy Action: (C) Explain:

When income is zero within the Keynesian cross model planned expenditure will be greater than zero and the intercept of the consumption function will hence not be zero either. The reason for this feature of the model is that either:  The Marginal Propensity to Save (MPS) is greater than 0.5  The Marginal Propensity to Consume (MPC) is greater than 0.5  Autonomous consumer expenditure depends only on the level of national income Autonomous consumer expenditure does not depend on the level of national incomeOnly one answer can be correct. Please pick one and explain your reasoning.

Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. Assume constant marginal productivity of labor. What will be the result of an increasing government consumption expenditure in this module, if not other paramiters are changed? a. Lower investment. b. Higher employment. c. Higher inflation. d. Lower employement.

Egypt authorities faced significant health and economic policy challenges during the COVID19 Pandemic, shutting down certain industries to protect public health. This shutdown resulted in almost 1 million jobs lost in April and May 2020, and a dramatic fall in consumers’ and firms’ confidence to spend and invest. Describe the effect that a fall in confidence had upon output in the Egypt economy using a Keynesian model of the macroeconomy. Ensure that your analysis includes the following:(i) the components of expenditure that are affected and why;(ii) the adjustment process associated with moving from an initial equilibrium (before the onset of the pandemic) to a new equilibrium (after the significant job losses), i.e. the mechanism that leads to a change in output (including a relevant diagram);(iii) an explanation of what the multiplier is and its role in explaining the fall in output; and(iv) a discussion of the policy actions that can restore aggregate demand to its initial level.

Consider a closed economy, where wages are sticky in the short run. The consumption function is C = co+c₁(Y-T), where the marginal propensity to consume c₁ is equal to 0.8. Initially the economy is in equilibrium at Y = Y* and P = Pº, where Pe is the price level that was expected when agents agreed their fixed nominal wage contracts. The short-run aggregate supply curve (SRAS) is horizontal. Suddenly the government increases government spending G by $200. For the following questions, if you think a variable goes up by (say) $50, just enter 50 as your answer. If you think a variable goes down by $50, enter -50 as your answer. If you think a variable doesn't change at all, enter 0 as your answer. 10. By how much will output Y change in the short run? 11. By how much will consumption C change in the short run? 12. By how much will investment I change in the short run? 13. By how much will output Y change (compared to its initial level before the change in G) in the long run, after wage…

On the graph, label your starting AD line as AD 2019.  Draw a new AD line showing the change to AD due to the pandemic. Label your starting SRAS line as SRAS 2019.  Draw a new SRAS line showing the change to supply due to the pandemic.Label the new short-run equilibrium RGDP and Price Level.   Does output (i.e. RGDP) increase or decrease in your model? Does the price level increase or decrease in your model? According to the AD-AS model when RGDP falls the unemployment rises and vice versa.  Does your graph indicate an increase or decrease in the unemployment rate

In the Keynesian short-run macro model, a fall in the money supply will a)move the economy to the left along the aggregate expenditure line. b)shift the aggregate expenditure line downward. c)move the economy to the right along the aggregate expenditure line. d)shift the aggregate expenditure line upward. e)cause the aggregate expenditure line to rotate until it is flat.

According to the AS-AD model, which of the following is true about output when there is an decrease in the SRAS and no other change? (Select all that are true) There is no change in output in the long run There is a decrease in output in the long run There is an increase in output in the short run There is an increase in output in the long run There is a decrease in output in the short run There is no change in output in the short run

Match the development on the graph to the macroeconomic process that it represents. slide along the LM curve slide along the IS curve shift of the LM curve shift of the IS curve the IS curve the LM curve an intersection of IS and LM ✓ [Choose ] does not happen in this scenario If the interest rate is to raise, it will be harder to have expenditure and there will be less money market is in equilibrium goods and loans markets are in equilibrium with a higher government spending, there is more expenditure even at the same old interest rate more transactions can only be supported if a higher interest rate compels people to give up liquidity goods, loans, and money markets are in equilibrium loans market is in equilibrium goods market is in equilibrium [Choose ] [Choose ] [Choose ]

Please ONLY answer V,vi, vii and viii