Question 5AStarting from a baseline Long Run Steady StateEquilibrium (LRSSE), the federal reserve increases interestrates.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 whichdirection? Why?How will this policy make the economy move awayfrom the baseline Long Run Steady State Equilibrium(how would it change unemployment or price levelrelative to the long run steady state equilibrium )?iv. Draw a graph to show the changes to the long runsteady state equilibrium (LRSSE).

Step 1:i) This is monetary policy because it involves the Federal Reserve changing the interest…

Answered: Question 5A Starting from a baseline…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

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Question 3 (Equilibrium) Since the Covid-19 crisis is nearing an end, the government is planning to phase out government spending programs. In other words government spending is expected to decrease. Explain how this would affect the equilibrium using the two period macroeconomic model that you have learnt (Draw the graph for the change in equilibrium and explain how the variables change). Show the changes in both the labor market and the goods market using the 2 step approach (direct and indirect effects) Discuss the changes in 1. Output Y 2. Output demand Yp 3. Output supply Ys 4. Labor N 5. Labor demand Np 6. Labor supply Ns 7. Interest rater 8. Wage w Feel free to make assumptions (about whether substitution effect is stronger than income effect, whether change in output demand is greater than change in output supply and so on.
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…
5) Suppose that: Mp = 800 + 0.2Y – 5000(r + n) P M5 = 1000 + 0.1Y – 3000n a. If n = 0.1 ;r = 0.1 ;Y = 2000, in equilibrium, what is the price level? b. What is the velocity? (using the same parameters as in a.) c. If output increases so that Y = 3000, what is the price level? d. What is the velocity? What is the change rate of the velocity? What does this number mean? e. Now, if a = 0.1 ;Y = 2000; and price level is forced to be P = 6, what is the equilibrium interest rate? f. What is now the velocity?
A6 According to your own point of view, which specific output gap most impacts the economy, the recessionary gap or inflationary gap? Explain in terms of the negative or positive demand shock (quantity demanded), aggregate price level, the unemployment rate, supply shock (quantity supplied), market equilibrium. 250 words, please!
I need help with number 5 & 6. Thank you ??
2. The economy is currently in the long-run macroeconomic equilibrium. a) Using an appropriately labelled graph, show the economy's current state. b) Suppose, the government decides to increase income taxes. What kind of policy did the government take? On the same diagram as a) show the effect of this policy in the short run and explain.
Question 1 There are three policy variables that the government and the Bank of Zambia control that have a major influence on the economy. Draw small sketch graphs and quick indications of the effects on Y and i of each variable moving both up and down while holding the other policy variables constant (i.e. there are six situations to consider). The first one is done for you as an indication of how to do the others: 1. Increase in G IS-LM Model i IS LM, Y increases i increases IS: IS, Y
Question 1 There are three policy variables that the government and the Bank of Zambia control that have a major influence on the economy. Draw small sketch graphs and quick indications of the effects on Y and i of each variable moving both up and down while holding the other policy variables constant (i.e. there are six situations to consider). The first one is done for you as an indication of how to do the others: 1. Increase in G IS-LM Model i IS LM, Y increases i increases IS: IS. Y Your answers for the other 2 must not exceed 1 page.
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?
COURSE: MACROECONOMIC - MUNDELL-FLEMING MODEL Until mid-2005, the Central Bank of China established a fixed exchange rate between its currency (yuan) and the dollar. The fixed exchange rate regime was reintroduced during the Great Recession between July 2008 and June 2010.After that date, the Chinese central bank established fluctuation bands for the yuan allowing it to move within these bands. However, the US has accused China on several occasions of taking actions to devalue its currency against the dollar.EXPLAIN and GRAPH with an open economy model with a fixed exchange rate (MUNDELL-FLEMING MODEL) the different chain effects that are generated when a country devalues its currency. From your results DETERMINE why it would be convenient for China to devalue its currency with respect to the dollar and in what way USA is harmed. Hint: according with statement on first paragrah, explain what's happens if devaluation process is defined and by Mundell-Fleming Model explain differents…
1.Does the Aggregate Demand (AD) curve always slope downward? Discuss and use explanations (interest rate effect, wealth effects, open economy effect to illustrate your answer).
13. In recent months there have been • lots of pent-up demand post lockdowns (e.g. many people who are flying for the first time since the lockdowns). • supply bottlenecks that are preventing some items from being shipped to stores in a timely fashion. This definitely adds to the costs of resources (production). Now consider an aggregate demand/aggregate supply model with the x-axis showing real GDP and the y-axis showing the inflation rate. These events are going to cause shifts in both curves. What result can you definitely predịct from the model? a. More unemployment b. Less unemployment c. More GDP d. Higher inflation rates.

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