Question
I know it is a lot but pleaseee help! I do not need a. answered just d-h. d) Find an expression for the Aggregate Demand
I know it is a lot but pleaseee help! I do not need a. answered just d-h.
d) Find an expression for the Aggregate Demand Function, which relates aggregate price level, P and real GDP, Y.
e) Find an expression for the Long Run Aggregate Supply Function.
Suppose that the Federal Reserve Bank has decided to stimulate the economy by increasing the money supply to .55=tM
f. Solve for new short-run equilibrium interest rate, r and real GDP, Y for the economy.
g) Find the long-run equilibrium value of interest rate, r, and price level, P for the economy.
h) Using the IS-LM and the aggregate demand-aggregate supply diagrams, carefully describe the adjustments that occur as the economy moves first to its short-run after the Federal Reserve increased the money supply to M = 55 and then to its long run equilibrium.
Suppose the economy is characterized by the following equations: Labor Supply: Lt=10, Capital Stock: Kt=10, Production Function: Yt=Kt3Lt7, Consumption Function: Ct=1.7+.7(YtTt), Investment Function: It=1.55rt, Government Spending: Gt=1, Tax Collections: Tt=1 Money Demand Function: PtMtd=6Yt100rt Money Supply: Mt=50 Price Level: Pt=1. a. Derive an expression for the IS curve, which relates real interest rate, r and real GDP, Y. Use this expression to find the slope of the IS-curve. Suppose the economy is characterized by the following equations: Labor Supply: Lt=10, Capital Stock: Kt=10, Production Function: Yt=Kt3Lt7, Consumption Function: Ct=1.7+.7(YtTt), Investment Function: It=1.55rt, Government Spending: Gt=1, Tax Collections: Tt=1 Money Demand Function: PtMtd=6Yt100rt Money Supply: Mt=50 Price Level: Pt=1. a. Derive an expression for the IS curve, which relates real interest rate, r and real GDP, Y. Use this expression to find the slope of the IS-curveStep by Step Solution
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