Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer the following questions based on macroeconomics to the best of your abilty Directions: You are advised to spend the rst 10 minutes reading

please answer the following questions based on macroeconomics to the best of your abilty

image text in transcribed
Directions: You are advised to spend the rst 10 minutes reading all of the questions and planning your answers. You will then have 50 minutes to answer all three of the following questions. You may begin writing your responses before the reading period is over. It is suggested that you spend approximately half your time on the rst question and divide the remaining time eqmy between the next two questions, Include correctly labeled diagrams, if useful or required, in explaining your answers A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. Assume a country's economy is currently in recession a. Draw a correctly labeled graph of the long-run aggregate supply, short-run aggregate supply, and aggregate demand curves, and show each of the following, i. Current real output, labeled V1, and current price level, labeled PL1 ii, Full employment output, labeled Yf b. Identify one action the central bank can take to help the economy recover from the recession. c. Draw a correctly labeled graph of the money market, and show the impact of the central bank's action identied in part (b) on the nominal interest rate. d. On your graph for part (a), show the effect of the central bank's action identified in part (b) on real output and the price level. e. Assume there is an increase in business condence as a result of the central bank's action. i, What will happen to the demand for capital goods? ii, Draw a correctly labeled graph of the loanable funds market, and show the effect of the change identied in part (e)(i) on the real interest rate. f. Given your answer to part (e), what is the effect on potential real output in the long run? Explain

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Environmental Economics

Authors: Barry Field, Martha K Field

5th Edition

0073375764, 9780073375762

More Books

Students also viewed these Economics questions

Question

2. It is the results achieved that are important.

Answered: 1 week ago