Question
Given the following economy Cd-200+ 0.8Y - 500r Id=200-500r a). Suppose that the real interest rate r in equilibrium is 0.2. What is the
Given the following economy Cd-200+ 0.8Y - 500r Id=200-500r a). Suppose that the real interest rate r in equilibrium is 0.2. What is the government spending G of this economy so that its full-employment output Y equals 1000? (hint: Use AE-Y to find G). b). Suppose M=8000 and 1-0.2. Suppose the real balance of money demand is given by L(Y, r)=0.75Y- 250r. What is the price level P in this economy for Y=1000? c). Please draw your IS-LM curves in the graph. Use the graph to illustrate what may happen if the economy has an adversary price shock, such as an oil price hike.
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Macroeconomics
Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone
6th Canadian Edition
321675606, 978-0321675606
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