Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 11, Problem 4NP
a.
To determine
To write: The equation for the aggregate
b.
To determine
To derive: The values of short run equilibrium values of output, real interest rate, investment and consumption and the price level when P = 15.
c.
To determine
To identify: The long-run equilibrium values of new output levels, real interest rate, consumption, investment and price level.
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Students have asked these similar questions
Interest Rate (%)
2004
0 $75 150 225
Investment ($)
Price Level
Interest Rate (%)
AS
Q₁
Real GDP
X
Investment
Demand
0 $50 100 150
Investment ($)
-AD₂ (/=$100)
AD3 (/=$50)
Z
AD₁ (/=$150)
O Increase the money supply from $75 to $150 billion.
O Increase the money supply from $150 to $225 billion.
O Decrease the money supply from $225 to $150 billion.
O Make no change in the money supply.
Refer to the above diagrams, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending
associated with each curve. All figures are in billions. The interest rate in the economy is 12 percent. What should the Fed do to achieve a noninflationary
full-employment level of real GDP (Qf)?
(M/P)d = 1,000 − 100r,M = 1000P = 2.a) Graph the supply and demand for real money balances.b) What is the equilibrium interest rate?c) Assume that the price level is fixed. What happens to the equilibrium interest rate if the supply ofmoney is raised from 1,000 to 1,200?d) If the Central Bank wishes to raise the interest rate to 7 percent, what money supply should it set?
Higher interest rates are likely to
Group of answer choices
decrease consumer spending and increase consumer saving.
have no effect on consumer spending or saving.
increase consumer spending and decrease consumer saving.
decrease both consumer spending and consumer saving.
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