Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 11, Problem 1E
(a)
To determine
The short-run effect of an increase in the interest rate.
(b)
To determine
The short-run effect of a fall in the rate of interest.
(c)
To determine
The short-run effect of a 1 percent point increase in
(d)
To determine
The short-run effect of a 2 percent decrease in
(e)
To determine
The short-run effect of a 1 percent point increase in
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Students have asked these similar questions
Calculations with the IS curve: Suppose the parameters of the IS curve are a = 0,b = 3/4, r = 2% and the real interest rate is initially R = 2%. Explain whathappens to short-run output in each of the following scenarios (consider eachseparately):(a) Te real interest rate rises from 2% to 4%.(b) Te real interest rate falls from 2% to 1%.(c) ac increases by 1 percentage point.(d) ag decreases by 2 percentage points.(e) aim decreases by 2 percentage points.
The following set of equations describe an
economy:
C = 14,400+ 0.5 (YT) - 40,000r
lp = 8,000 - 20,000r
G = 7,800
NX = 1,800
T = 8,000
Y* = 40,000
Suppose that the real interest rate (r) is 10%. Is the
economy in long run equilibrium? If not, what real
interest rate should central bank set to restore the
economy back to the long run equilibrium? And
what methods can central bank use to adjust the
interest rate? (Round your answer to 2 decimal
places)
Which of the following statements are true, which are false? If an increase in the real
interest rate leads to a higher level of consumption in both periods, this can be explained
through
(a) substitution effect of the real interest rate change;
(b) income effect of the real interest rate change.
Chapter 11 Solutions
Macroeconomics (Fourth Edition)
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