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Please show the calculation for the question F, G, H and I. II. Money Demand and Aggregate Demand Suppose that in Kenya consumption is given
Please show the calculation for the question F, G, H and I.
II. Money Demand and Aggregate Demand Suppose that in Kenya consumption is given by C = 100+ 0.75(Y - T). Assume government purchases G are 160, and the government's budget is balanced so G=T. A. What is the marginal propensity to consume? Assume that investment is given by 1=285-10*r And that money demand is given by: Md = 0.8Y - 80r P And that, initially, the money supply is 800 and the price level is 1 B. At what interest rate does real money supply equal real money demand, if output is 1200? C. What is the equilibrium interest rate for both the investment and money demand markets? D. What is the equilibrium output? E. Derive the aggregate demand curve when G=T=160 and M=800. Now suppose that the long run aggregate supply (LRAS) is actually equal to 1900. F. What is the long run price level? (Assume that the non-price variables do not change). Suppose the Federal Reserve, starting from the LRAS equilibrium, doubles the money supply, setting M=1600. G. Before prices adjust, what is equilibrium output? H. In the long run, after prices can adjust, what is new equilibrium output? . I. In the long run, after prices adjust, what is the new equilibrium price level? II. Money Demand and Aggregate Demand Suppose that in Kenya consumption is given by C = 100+ 0.75(Y - T). Assume government purchases G are 160, and the government's budget is balanced so G=T. A. What is the marginal propensity to consume? Assume that investment is given by 1=285-10*r And that money demand is given by: Md = 0.8Y - 80r P And that, initially, the money supply is 800 and the price level is 1 B. At what interest rate does real money supply equal real money demand, if output is 1200? C. What is the equilibrium interest rate for both the investment and money demand markets? D. What is the equilibrium output? E. Derive the aggregate demand curve when G=T=160 and M=800. Now suppose that the long run aggregate supply (LRAS) is actually equal to 1900. F. What is the long run price level? (Assume that the non-price variables do not change). Suppose the Federal Reserve, starting from the LRAS equilibrium, doubles the money supply, setting M=1600. G. Before prices adjust, what is equilibrium output? H. In the long run, after prices can adjust, what is new equilibrium output? . I. In the long run, after prices adjust, what is the new equilibrium price levelStep by Step Solution
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