Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 13, Problem 4AP
a)
To determine
To know: The effect of supply shock on country’s net exports.
b)
To determine
To know: The effect on net exports when there is temporary increase in money supply.
c)
To determine
To check: Whether prediction made is confirmed or contradicted about spending behavior.
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Economists in Funlandia, a closed economy, have collected the following information about the economy for a particular year: Y = 10,000; C = 6,000; T = 1,500; G = 1,700. The economists also estimate that the investment function is: I =3,300 –100r where r is the country’s real interest rate, expressed as a percentage. Calculate private saving, public saving, national saving, investment, and the equilibrium real interest rate
Consider a closed economy.
Consider the effects of an increase of LFD in the
loanable funds market.
In terms of the absolute value, its SRGE effects on y*
is
its LRGE effects on y*.
Here it = an increase of LFD in the loanable funds
market.
Hint:
You need to read the lecture notes of 4:3 General
Equilibrium Effects - Notes.pdf
either larger than, or small than, or the same as
O larger than
smaller than
the same as
In the classical model with a closed economy, if the interest rate is too low, then investment is too
compared to savings; as a result, the interest rate will
high; rise
high; fall
low; rise
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