EBK INTERMEDIATE MICROECONOMICS AND ITS
12th Edition
ISBN: 9781305176386
Author: Snyder
Publisher: YUZU
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Question
Chapter 10, Problem 10.8P
a)
To determine
The money wage rate and normal values of X and Y.
b)
To determine
whetherthis model exhibit classical dichotomy between its real sector and monetary sector.
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Students have asked these similar questions
The commodity market for a simple two sector
. economy is in equilibrium when Y= C + I, the money
market is in/equilibrium when the supply of money
(M,) equal money demand (Ma Which in turn is
composed of the transaction demand for money
(M7) and the speculative demand for money (M,),
Assume a two- sector economy where
C=48 + 0.8 Y, = 98- 75 i
M, = 250, M, = 0.3 Y and M,= 52- 150 i
%3D
%D
Suppose that the following system of equations describe the macroeconomy of a
hypothetical country:
Y= C(y)+I(i)+G : IS or goods market
M/p=L(i,y) : LM or money market
a) Get the total differentials of the above system of equations and put your answer
in matrix representation.
b) Taking money supply and government expenditure as exogenous and the price
level as fixed, determine and provide economic intuition for the signs and
magnitudes of the following multipliers
i)
dY/dG
ii)
di/dG
c) For a simultaneous increase in both the interest elasticity of investment and
interest elasticity demand for money parameters, determine the net effect on the
values of the multipliers in part b).
d) For a horizontal LM curve, determine the numerical values of your answers in
part b) above if:
Marginal propensity to consume=5/6
Tax rate=0.25
Interest elasticity of investment=5
Interest elasticity of demand for money=50
Income elasticity of demand for money=2
For this discussion I want you to think of an item (a piece of capital) that a firm could invest in to make profit. The purpose of this discussion is to help understand how the process of commercial banks making loans to firms increases the money supply. In the textbook it seems like the process of banks making loans and firms paying those loans back happens instantaneously. However, in reality that process takes time (several years). Typically, loans are re-paid over 10, 15, or even 30 years. The firms use profits from new business opportunities, opportunities they would not have had without the loan, to repay the bank over time.
Describe a piece of capital a company might want to purchase by taking out a loan from a bank.
Explain how having this new piece of capital would improve profits for the firm.
How does the real interest rate impact the firm’s decision to take out the loan?
How does the corporate tax rate impact the firm’s decision to take out the loan?
Example: A chef, who…
Chapter 10 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
Ch. 10.2 - Prob. 1MQCh. 10.4 - Prob. 1MQCh. 10.4 - Prob. 2MQCh. 10.4 - Prob. 1.1MQCh. 10.5 - Prob. 1TTACh. 10.5 - Prob. 2TTACh. 10.7 - Prob. 1MQCh. 10.7 - Prob. 2MQCh. 10.7 - Prob. 3MQCh. 10.8 - Prob. 1TTA
Ch. 10.8 - Prob. 2TTACh. 10.8 - Prob. 1MQCh. 10.8 - Prob. 2MQCh. 10 - Prob. 1RQCh. 10 - Prob. 2RQCh. 10 - Prob. 3RQCh. 10 - Prob. 4RQCh. 10 - Prob. 5RQCh. 10 - Prob. 6RQCh. 10 - Prob. 7RQCh. 10 - Prob. 8RQCh. 10 - Prob. 9RQCh. 10 - Prob. 10RQCh. 10 - Prob. 10.1PCh. 10 - Prob. 10.2PCh. 10 - Prob. 10.3PCh. 10 - Prob. 10.4PCh. 10 - Prob. 10.5PCh. 10 - Prob. 10.6PCh. 10 - Prob. 10.7PCh. 10 - Prob. 10.8PCh. 10 - Prob. 10.9PCh. 10 - Prob. 10.10P
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