Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Economics Expert

Comparing long run effects of the monetary policy also fiscal policy.

Consider the economy of Hicksonia. The consumption function is given by

C= 200 + 0.75(Y-T)
The investment function is
I= 200 - 25r

Government purchases also taxes are both 100. The money demand function in Hicksonia is (M/P)= Y -100r

The money supply M is 1,000

a. Derive also graph also equation for the aggregate demand curve.

Hint : to do this , notice which from the money demand function also the effect which M= 1000 we have which ((1000)/P)=Y-100r
Solving for r we obtain
R=(Y/(10))=((10)/p)
Use this expression for r to express the investment equation as a function of constants Y an dP. Then use the equilibrium condition in the goods marketplace which
Y= C + I + G
This expression should give you an equation involving P also Y. solve this equation for P as a function of Y . This is the aggregate demand curve which we are looking for.

b. Suppose P=2. Consider an increase in the money supply M from 1,000 to 1,200. Illustrate what happens to this aggregate demand curve? Illustrate what happens to Y/

c. Repeat point (b) where now it is government purchases which increases from 100 to 150 while M=1,000. Illustrate what happens to Y?

d. Repeat point © but now suppose which the government finances the increase in government purchases with taxes also hence in the new equilibrium G= T= 150.

e. Compare the long run effects of the monetary policy in point© also the fiscal policy in point (d).

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M916625

Have any Question? 


Related Questions in Business Economics

Chapter 1 managing changeq1 figure 176 shows how bad an

Chapter 1 Managing change Q1 Figure 1.76 shows how bad an implementation can become. Action needs to be taken to prevent this kind of situation. What would you recommend should be done? Q2 You are the project manager for ...

Assessment task descriptiontopicstudents will be required

ASSESSMENT TASK: DESCRIPTION Topic Students will be required to choose a specific enterprise (it should ideally be one with which they are somewhat familiar) and develop a sustainability indicators monitoring system for ...

Assignmentarticle reportplease select a marketing topic you

Assignment Article Report Please select a marketing topic you learned and then search in the Wall Street Journal (either online or hardcopy *) and select an article about that topic within the last 12 months. To do this, ...

Assignmentmoral and ethical requirements should serve as

Assignment Moral and ethical requirements should serve as drivers which encourage a business to invest in or spend money on cybersecurity products, services, and programs. You have been invited to participate in a "light ...

Assignmentpart idirections please write a paper that is at

Assignment PART I Directions: Please write a paper that is at least two to three pages in length in which you address the questions below. Write your paper in APA format with at least one cited scholarly reference. Revie ...

Allocation and allotments please respond to the following1

"Allocation and Allotments" Please respond to the following: 1. From the first e-Activity, examine and evaluate the disparity of Georgia budget allocation for education and property tax to the various localities. Based o ...

Question 1 for the following situations calculate

Question 1 . For the following situations, calculate elasticity of demand and comment on the answer.                             When the price of commodity X was Rs. 12/-, 40 units it were demanded. When the price decre ...

Assignmentinstructions1 select an illegal activity and

Assignment Instructions 1. Select an illegal activity and transform/mask its' true purpose with the disguise of a legitimate business operation. In other words, create a start-up business that would be viewed as a legal ...

Assessment task in this assessment students are required to

ASSESSMENT TASK: In this assessment, students are required to demonstrate their ability to apply economic principles learnt in this subject to analysing real-world business operations and evaluate how their long-run busi ...

What is the relationship between economy business and

What is the relationship between economy, business, and society? -6 page essay (includes only ONE page for references,but the cover page is not included in the 6 page requirement) -Double spaced -APA format

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen