Consider the following IS-LM model: C = 201+0.44YD /-147+0.25Y-1,043/ T= 12- MIP = G= 313 The IS equation is determined to be Y=1777.42-3364.52/ The LM equation is given as /= 0.04 Initial equilibrium values of Y, C, I, and the real money supply are calculated as Y = 1,643 C=814 /=516 M/P= 2,819 250 0.04 /= Now suppose that the central bank cuts the interest rate to 2%. In a graph of the IS-LM model, this causes the LM curve to shift downward (Round your response to the nearest integer.) Following the change in the interest rate to 2%, the value of equilibrium real output becomes Following the change in the interest rate to 2%, the values of the new equilibrium C and/are: (Round your responses to the nearest integer.) C- 1.9Y-7,558/ (Round your responses to the nearest integer.) Which of the following statements is not consistent with the effects of an expansionary monetary policy? As the interest rate falls, A. the real demand for money rises. OB. equilibrium consumption increases. OC. the money supply increases and equilibrium real output increases. OD. equilibrium investment may increase, decrease, or remain unchanged. With the central bank's expansionary monetary policy, the value of the real money supply becomes (Round your response to the nearest integer)
Consider the following IS-LM model: C = 201+0.44YD /-147+0.25Y-1,043/ T= 12- MIP = G= 313 The IS equation is determined to be Y=1777.42-3364.52/ The LM equation is given as /= 0.04 Initial equilibrium values of Y, C, I, and the real money supply are calculated as Y = 1,643 C=814 /=516 M/P= 2,819 250 0.04 /= Now suppose that the central bank cuts the interest rate to 2%. In a graph of the IS-LM model, this causes the LM curve to shift downward (Round your response to the nearest integer.) Following the change in the interest rate to 2%, the value of equilibrium real output becomes Following the change in the interest rate to 2%, the values of the new equilibrium C and/are: (Round your responses to the nearest integer.) C- 1.9Y-7,558/ (Round your responses to the nearest integer.) Which of the following statements is not consistent with the effects of an expansionary monetary policy? As the interest rate falls, A. the real demand for money rises. OB. equilibrium consumption increases. OC. the money supply increases and equilibrium real output increases. OD. equilibrium investment may increase, decrease, or remain unchanged. With the central bank's expansionary monetary policy, the value of the real money supply becomes (Round your response to the nearest integer)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Consider the following IS-LM model:
C = 201+0.44YD
/= 147+0.25Y-1,043/
G= 313
T =
1,2
MIP =
250
0.04
1.9Y-7,558/
The IS equation is determined to be Y=1777.42-3364.521
The LM equation is given as /=0.04
Initial equilibrium values of Y, C, I, and the real money supply are calculated as
Y = 1,643
C=814
/=516
M/P = 2,819
A. the real demand for money rises.
OB. equilibrium consumption increases.
Now suppose that the central bank cuts the interest rate to 2%. In a graph of the IS-LM model, this causes the LM curve to shift downward
(Round your response to the nearest integer.)
Following the change in the interest rate to 2%, the value of equilibrium real output becomes
Following the change in the interest rate to 2%, the values of the new equilibrium C and/are:
C =
(Round your responses to the nearest integer.)
/=
(Round your responses to the nearest integer.)
Which of the following statements is not consistent with the effects of an expansionary monetary policy?
As the interest rate falls,
OC. the money supply increases and equilibrium real output increases.
OD. equilibrium investment may increase, decrease, or remain unchanged.
With the central bank's expansionary monetary policy, the value of the real money supply becomes (Round your response to the nearest integer)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education