Consider the economy of Panda Republic which is characterized by the following IS-LM model.IS equation: Y = C(Y - T) + I(Y , i ) + GLM equation: i = i(Hint: You must draw the graph to answer the following questions)a. In 2008, consumer confidence fell significantly due to fears of recession. How would this affect the economy? Describe graphically.Answer:The fall in consumer confidence would [ Select ]aggregate consumption. Graphically, the [Select]v curve shifted[ Select ]. As a result, the output ( Select]Given the interest rate, investment [ Select]The economy fell into a recession.b. In response, the government implemented an expansionary fiscal policy by cutting taxes. Describe graphically the effects on the economy.Answer:The tax cut would [ Select ]consumption, shifting the [Select][ Select ].As a result.curvethe output[ Select ]Given the interest rate, investment ( Select ]The economy would get out of the recession.c. Suppose that the government was running a large budget deficit, constraining the use of an expansionary fiscal policy. In fact, the government had to implement acontractionary fiscal policy to reduce the deficit. However, the Fed was able to use its expansionary monetary policy. The interest rate was cut. Describe graphicallythe effects of this policy mix on the economy.Answer:The fiscal contraction would shift [ Select ]The monetary expansion would shift [ Select ]. As a result, theinterest rate [ Select ]v while output and investment ( Select]. If output [ Select ]investment would [ Select ]

A) The fall in consumer confidence would decrease aggregate consumption. As per Graph the IS curve…

Answered: Consider the economy of Panda Republic…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Consider the following model. Expenditure is given by: E = C +1 + G. The consumption function is specified as: C = c0 +cY. We assume a closed macroeconomics system so that: Y=E. If the model parameters are configured such that I= 500, G=2000, c0=1000 and c=0.8, what will the level of consumption expenditure, C, be equal to? a. 4,375 b. 15,000 c. 14,000 Cd. 14,500
How does the increase in interest rates raise the chances of a recession? How can we expect the increase in interest rates to affect the consumption of the poorest 20% and richest 20% of households?
Economics Consider the following estimated model based on quarterly data of Australian manufacturing exports from January 2015 to December 2019. EXP: = -5.38+0.191Y, + 0.0216FDI_+2.61t t-1 Where EXP, Y and FDI represent manufacturing exports (in thousand dollars), output (in thousand dollars) and foreign direct investment (in thousand dollars), respectively. The following is an excerpt of the actual data. What is the predicted exports in the fourth quarter of 2015? Period Y FDI Third quarter of 2015 57234 344 Fourth quarter of 2015 60031 385 Question 13 options: A11478.41 thousand dollars. B11525.50 thousand dollars. C1151.92 thousand dollars. D11520.17 thousand dollars.
I have to analyze, using the IS-LM model, the macroeconomiceffects of an increase in savings in the short term and its implications for long-term growth. Specifically, I have to suppose that households (consumers) lose confidence and start saving more for any level of disposable income. Can you plase answer the following question (using graphs where possible): In terms of total savings and, therefore, of potential long-term growth, is a flat LM curve or a positive sloping LM curve better?
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The context is a large negative shock to autonomous consumption in an open economy. You may assume the economy is initially at a medium run equilibrium. Aggregate demand can decline for many reasons. Give a specific example of when you would choose to model the onset of a recession by a fall in autonomous consumption and explain why. Use graphs if possible.
Graphically show the likely short-run impact on US real GDP and aggregate price level using the AD/AS model. Explain your prediction. Which curve in the AD/AS model would a change in US consumer consumption affect? Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism. Answer completely and accurate answer. Rest assured, you will receive an upvote if the answer is accurate.
Assuming that there is no government spending or trade, an economy’s GDP is the sum of domestic consumption C and investment I, i.e. Y = C+ I Assume that I is unaffected by GDP Assume the consumption function is C = c0 + c1Y In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which FIVE of the following statements are correct? Select one or more: A. If the economy above is a demand-driven economy, then the equilibrium solution for Y is given by Y = m(c0 + I), where m = 1/(1 - c1) is the multiplier. B. if c1 = 0.8 the multiplier is equal to 1/0.8= 1.25 C. if c1 = 0.75 the multiplier is equal to 4 D. assume c0 =100, I=50, c1=0.6. The equilibrium value of Y in a demand-driven economy is 300. E. Assume that Y is initially 400, I is initially 100, and the multiplier is 2.5. I increases by 10%. The multiplier implies that in equilibrium Y will increase by 25%. F. The higher is c1 the larger is the multiplier G. If consumers…
Which of the following would NOT cause a shift in AD? Select one: a. A reduction in interest rates b. A fall in the cost of production c. A reduction in income tax d. An increase in government spending
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We again assume asimple closed economy with GDP of 100 and:c0(autonomous consumption) = 20c1 (marginal propensity to consume) = 0.6I (investment) = 20.a) Now assume that c0falls by 5 (i.e. 5% of GDP), i.e. for any given level of output,consumption will fall by 5. Show the implied fall in the AD function in yourdiagram and show that output will fall by more than 5.b) Show that the multiplier is equal to 2.5, and hence that, in the new equilibrium,output will have fallen by 12.5 (i.e. by 12.5%)c) How big would the impact be if, say, c1 = 0.4 or c1 = 0.8? Explain the difference.
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