Ask Question, Ask an Expert

+61-413 786 465

info@mywordsolution.com

Ask Microeconomics Expert

Economics


Home >> Microeconomics

Suppose that the equation for autonomous planned spending, Ap, Ap =6,200-200r and the value of the multiplier, k, is 2.5.

A. Derive the equation for the IS curve, Y=k*Ap. Graph for interest rates 0 & 8, with intervals of one-half of a percentage point.

B. Suppose the equation for the LM curve is Y=13500+100r. Use this equation to explain the level of income at which there is a zero lower bound on the federal funds rate, the interest rate that the Fed controls.

C. Graph the LM curve for interest rates between & 8 with intervals of one-half a percentage point.

D. Suppose that the term premium is 1.0 percentage point and the risk premium is 2.0 percentage points. Use the M curve with the zero lower bound and the term premium and risk premium to graph the LM curve for the government bond rate and the LM curve for the private bond rate at interest rates between 0 & 8, with intervals of one-half of a percentage point.

E. Use the graph of the IS curve and the three LM curves to explain what the equilibrium interest rates for the federal funds rate, the government bonds rate, and the private bond rate are and what the equilibrium level of income is.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M9466956

Have any Question?


Related Questions in Microeconomics

Question jana enjoys traveling with her family as a result

Question: Jana enjoys traveling with her family. As a result, she has a strong preference for a job that provides a substantial number of paid vacation days. Her current job gives her 15 days of paid vacation and her ann ...

Question if the price consumers pay and the price sellers

Question: If the price consumers pay and the price sellers receive are not affected by whether consumers or sellers collect a tax on a good or service, why does the government usually collect a tax from sellers rather th ...

Question in september 1999 senator edward kennedy released

Question: In September 1999, Senator Edward Kennedy released a report saying the minimum wage should be raised to $15.28 per hour. The reason for such a big increase, according to Kennedy, was that no one should have to ...

Question a machine costs 525000 today and has an estimated

Question: A machine costs 525,000 today and has an estimated scrap value of $3000. Inflation averages 4% per year. The effective annual interest rate is 7%. How much money needs to be set aside each year to replace the m ...

Question a competitive firms production function

Question: A competitive firm's production function is f(x 1 , x 2 ) = 12x 1/2 1  + 4x 1/2 2 . The price of factor 1 is $1 and the price of factor 2 is $2. The price of output is $4. What is the profit-maximizing quantity ...

Question housing bubblebecause of the hosing bubble many

Question: Housing Bubble "Because of the hosing bubble, many houses are now selling for much less than their selling price just two to three years ago. There is evidence that homeowners with virtually identical houses te ...

Question why do the authors of why ation ail place such

Question: Why do the authors of Why ation ail place such heavy emphasis on institutions as one of the most critical elements for the generation of prosperity among developing countries? What other factors do they also de ...

Question scenario using the same organization and the

Question: Scenario: Using the same organization and the lemonade drink from the Week 4 Learning Team assignment, develop an analysis for the bank. The bank will be using this information to make their final decision on h ...

Question in mid-1968 the government imposed a 10 income tax

Question: In mid-1968, the government imposed a 10% income tax surcharge on personal and corporate income to pay for the costs of the Vietnam War. It was widely believed that the surcharge was temporary, and in fact it w ...

Question michael kinsley a political columnist observes the

Question: Michael Kinsley, a political columnist, observes: "The idea of insurance is to share the risks of bad outcomes." In what sense does insurance involve sharing risks? How does the problem of adverse selection aff ...

  • 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

Why might a bank avoid the use of interest rate swaps even

Why might a bank avoid the use of interest rate swaps, even when the institution is exposed to significant interest rate

Describe the difference between zero coupon bonds and

Describe the difference between zero coupon bonds and coupon bonds. Under what conditions will a coupon bond sell at a p

Compute the present value of an annuity of 880 per year

Compute the present value of an annuity of $ 880 per year for 16 years, given a discount rate of 6 percent per annum. As

Compute the present value of an 1150 payment made in ten

Compute the present value of an $1,150 payment made in ten years when the discount rate is 12 percent. (Do not round int

Compute the present value of an annuity of 699 per year

Compute the present value of an annuity of $ 699 per year for 19 years, given a discount rate of 6 percent per annum. As

Follow Us

© Copyright 2013-14 mywordsolution.com All rights reserved