Given the following information: - The economy is in the long-run equilibrium. - The Fundamental Equation of Monetarism is true. - The income velocity of money is constant and the money supply is fixed: v=0.15 M=5600 - The production function is Y=F (L,K) = 8×√L×√K - The endowment of resources is given by the input combination (L,K) = (49,25) A. Find the equation of the aggregate demand curve. B. What is the equation of the long-run aggregate supply curve? C. What is the equilibrium price level when the unemployment rate is at NAIRU?
Given the following information: - The economy is in the long-run equilibrium. - The Fundamental Equation of Monetarism is true. - The income velocity of money is constant and the money supply is fixed: v=0.15 M=5600 - The production function is Y=F (L,K) = 8×√L×√K - The endowment of resources is given by the input combination (L,K) = (49,25) A. Find the equation of the aggregate demand curve. B. What is the equation of the long-run aggregate supply curve? C. What is the equilibrium price level when the unemployment rate is at NAIRU?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Given the following information:
- The economy is in the long-run equilibrium.
- The Fundamental Equation of Monetarism is true.
- The income velocity of money is constant and the money supply is fixed:
v=0.15 M=5600
- The production function is
Y=F (L,K) = 8×√L×√K
- The endowment of resources is given by the input combination
(L,K) = (49,25)
A. Find the equation of the aggregate
B. What is the equation of the long-run
C. What is the
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