Question 5A Starting from a baseline Long Run Steady State Equilibrium (LRSSE), the federal reserve increases interest rates. i. What kind of policy is this (Monetary or fiscal; ii. iii. expansionary or contractionary? How do you know? As a response which curve will start shifting in which direction? Why? How will this policy make the economy move away from the baseline Long Run Steady State Equilibrium (how would it change unemployment or price level relative to the long run steady state equilibrium )? iv. Draw a graph to show the changes to the long run steady state equilibrium (LRSSE).

QUESTION 4 Chapter 14 Suppose economy is in long run equilibrium. [Only one diagram is required for this question, draw and label clearly to show all relevant points and moves, if more than one diagrams are drawn for this question, I will give a zero grade for this question] a. Use the model of aggregate demand and aggregate supply to illustrate the initial equilibrium (call it point A). Be sure to include both-short run and long-run aggregate supply. b. The central bank raises the money supply by 10%. Use the diagram you drew in part a) to show what happens to output and price level as the economy moves from initial equilibrium A to the new short-run equilibrium (call it point B). Explain all the details about the changes that happen due to increase in money supply and how these changes affect the model. c. Show how economy moves from the short run equilibrium (point B) to the new long- run equilibrium (call it C) and explain why it moves to C. d. According to sticky wage theory of…

I need help with number 5 & 6. Thank you ??

Question 1 An economy is described by the following equations, where all the variables have the usual definition: C = 1700 + 0.8 (Y - T) - 2000r IP = 3000 - 1100r G= G = 2500 X = X = 80 %3D M= 0.06Y T=T = 2500 a) Find an equation relating planned spending to output and the real interest rate. Also find the short-run equilibrium output when real interest is 7%. . b) Find the income-expenditure multiplier. c) If potential output = 20000, by how much would government purchases have to change in order to eliminate any output gap?