a) "Fresh off election victory, Japan PM Kishida lays out plans for $265b fiscal stimulus, requiring new debt" b) "Chile's central bank unexpectedly hikes its benchmark rate by 125 basis points" c) "Chinese developer bond rout deepens: junk bond yields spike to 13-year high, investment-grade Chinese debt yields also rising, central bank insists on keeping monetary policy stable"

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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5

For each of the following headlines, use the
IS-LM-PC model to explain how the news
would be expected to affect GDP in the
short and in the medium run. Make sure to
point out whether the IS curve, the LM
curve and/or the PC curve would shift, and
in what direction.
a) "Fresh off election victory, Japan PM
Kishida lays out plans for $265b fiscal
stimulus, requiring new debt"
b) "Chile's central bank unexpectedly hikes
its benchmark rate by 125 basis points"
c) "Chinese developer bond rout deepens:
junk bond yields spike to 13-year high,
investment-grade Chinese debt yields also
rising, central bank insists on keeping
monetary policy stable"
d) "Spanish government announces plan to
roll back 2012 labor market reform that
made it cheaper to lay off workers".
Transcribed Image Text:For each of the following headlines, use the IS-LM-PC model to explain how the news would be expected to affect GDP in the short and in the medium run. Make sure to point out whether the IS curve, the LM curve and/or the PC curve would shift, and in what direction. a) "Fresh off election victory, Japan PM Kishida lays out plans for $265b fiscal stimulus, requiring new debt" b) "Chile's central bank unexpectedly hikes its benchmark rate by 125 basis points" c) "Chinese developer bond rout deepens: junk bond yields spike to 13-year high, investment-grade Chinese debt yields also rising, central bank insists on keeping monetary policy stable" d) "Spanish government announces plan to roll back 2012 labor market reform that made it cheaper to lay off workers".
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