Answered step by step
Verified Expert Solution
Question
1 Approved Answer
help me with this one i need it ASAP huhu tysm A. Given the following functions, you answer the following: Consumption Function: C = 240
help me with this one i need it ASAP huhu tysm
A. Given the following functions, you answer the following: Consumption Function: C = 240 + 0.5(1 -t)Y Planned Investment Function: / = 100- 30r Government Spending for goods and services: G=120 Tax rate (t) = 0.20 or 20% Imports = 40 Exports = 60 M = 375 P = 1.5 L = 0.5Y - 50r Where: C is consumption, I refers to Investment, TR is transfer of payments, - is the real money supply, M is the nominal money supply, P is the price level, L is the demand for real balances, Y is the output, and r is the interest rate. 1. (5 points). Find the IS equation. 2. (5 points). Find the LM equation. 3. (5 points). Find the equilibrium output (Y*) and interest rate (r*). 4. (5 points). Find the multiplier with government sector. 5. (5 points). Find the fiscal policy multiplier. 6. (5 points). Illustrate the IS-LM-BP framework given the Y* and r* and BP is in perfect capital mobility. 7. (5 points). Illustrate the effect of decrease in demand for exports under perfect capital mobility and flexible exchange rate using the IS-LM-BP framework. What happen to the equilibrium output and interest rate? 8. (5 points). Illustrate the effect of increase in money supply under perfect capital mobility and flexible exchange rate using the IS-LM-BP framework. mobility. Is the policy effective? Briefly explain your answer using the graph that you illustrated. 9. (5 points). Illustrate the effect of fiscal expansion under fixed rates and perfect capital mobility. Is the policy effective to increase output without crowding effect? Briefly explain your answer using the graph that you illustrated. 10. (5 points). Illustrate the effect of monetary expansion under fixed rates and perfect capital mobility. Is the policy effective? Briefly explain your answer using the graph that you illustrated. B. Given the following scenario, you do the following tasks and answer the questions. SCENARIO: In 2010, the average nominal exchange rate of Euro relative to Australian Dollar (AUD) is 60.80/AUD. The price of High-Class cellphone in Australia is 1,800 AUD while the same product costs 1,600 Euro in Germany. In 2020, the nominal exchange rate is 60.60/ AUD. The price of High-class cellphone is 2,000 AUD in Australia, while 1,700 Euro in Germany. Year Exchange rate Australia Germany (E/AUD) 2010 60.80/AUD 1,800 AUD 1,600 Euro 2020 60.60/ AUD 2,000 AUD 1,700 Euro 1. (5 points). Calculate the Real exchange rate of High-class cellphone in Australia relative to the price in Germany for the year 2010. 2. (5 points). Calculate the Real exchange rate of High-class cellphone in Australia relative to the price in Germany for the year 2020. 3. (5 points). Calculate the percentage change of real exchange rate from 2010 to 2020. Does the real exchange rate decrease or increase? C. You answer the following questions by showing a graph or illustration using the AS-AD framework. 1. (5 points). Using the supply side economics. What will happen to the aggregate supply and demand, if the government supports technological progress in the economy? Explain your answer by showing an illustration using the AS-AD framework. 2. (5 points). Is expansionary monetary policy effective in Keynesian case? Explain your answer by showing an illustration using the AS-AD framework. 3. (5 points). Is expansionary monetary effective in Classical case? Explain your answer by showing an illustration using the AS-AD framework. 4. (5 points). Is expansionary fiscal policy effective in Keynesian case? Does the crowding effect occur? Explain your answer by showing an illustration using the AS-AD framework. 5. (5 points). Is the expansionary fiscal policy effective in Classical case? Does the crowding effect occur? Explain your answer by showing an illustration using the AS-AD frameworkStep by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started