Consider an economy with a constant nominal money supply, a constant level of real outout Y= 400, and a constant real interest rate r 10%. Suppose that the income elasticity ofmoney demand is 1.20 and the interest elasticity of money demand is-0.10.a. By what percentage does the equilibrium price level differ from its initial value if output increases to Y 480.00 (and rremaine at 10%)?%AP=(enter your result as a percentage rounded to two decimal places).b. By what percentage does the equilibrium price level differ from its initial value if the real interest increases to r-12.50% (and Y remaina at 400)?%AP (enter your result as a percentage rounded to two decimal placea).c. Suppose that the real interest rate inoreases to re 12.50%. By what percentage would real output have to increase for the equilibrium price level to remain at its initial value?%AY- T(enter your reault an a percentage rounded to two decimal places)

In the macroeconomic model of IS-LM, the LM curve establishes a relation between the national income…

Consider an economy with a constant nominal money supply. a constant level of real output Y 400, and a constant real interest rater 10%. Suppose money demand is 1.20 and the interest elasticity of money demand is -0.10. a By what percentage does the equilibrium price level difer trom its intial value if output increases to Y 480.00 (and rremaine at 10N? SAP- P-(enter your reault as a percentage rounded to hwo decimal placea) b. By what percentage does the equilbrium price level differ from its initial value if the real interest increases to r12.50% (and Y remaina at 400y? SAP (enter your reault asa peroentage rounded to hwo decimal placea) e. Suppose that the real interest rate inoreases to r12.50% By what percentage would real output have to increase for the equlibrium price level to remain at its intial value? teg deomal placea)

Consider an economy with a constant nominal money supply. a constant level of real output Y 400, and a constant real interest rater 10%. Suppose money demand is 1.20 and the interest elasticity of money demand is -0.10. a By what percentage does the equilibrium price level difer trom its intial value if output increases to Y 480.00 (and rremaine at 10N? SAP- P-(enter your reault as a percentage rounded to hwo decimal placea) b. By what percentage does the equilbrium price level differ from its initial value if the real interest increases to r12.50% (and Y remaina at 400y? SAP (enter your reault asa peroentage rounded to hwo decimal placea) e. Suppose that the real interest rate inoreases to r12.50% By what percentage would real output have to increase for the equlibrium price level to remain at its intial value? teg deomal placea)

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter22: Aggregate Demand And Aggregate Supply

Section: Chapter Questions

Problem 12P

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