Consider the following /S-LM model: C = 245+0.5YD / = 160+0.21Y-821/ G = 398 Y = 2,079 C = 1,126 1 = 556 MIP = 4,759 T = MIP = The /S equation is determined to be Y = 2220.69-2831.03. The LM equation is given as / = 0.05 Initial equilibrium values of Y, C, I, and the real money supply are calculated as 318 0.05 2.5Y-8,769/ | = Now suppose that the central bank hikes the interest rate to 7%. In a graph of the IS-LM model, this causes the LM curve to shift (Round your response to the ne Following the change in the interest rate to 7%, the value of equilibrium real output becomes Following the change in the interest rate to 7%, 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 a contractionary monetary policy? As the interest rate rises, O A. the real demand for money falls. O B. the money supply decreases and equilibrium real output decreases. O C. equilibrium investment may increase, decrease, or remain unchanged. O D. equilibrium consumption decreases. With the central bank's contractionary monetary policy, the value of the real money supply becomes downward upward (Round your response to the nearest integer.)
Consider the following /S-LM model: C = 245+0.5YD / = 160+0.21Y-821/ G = 398 Y = 2,079 C = 1,126 1 = 556 MIP = 4,759 T = MIP = The /S equation is determined to be Y = 2220.69-2831.03. The LM equation is given as / = 0.05 Initial equilibrium values of Y, C, I, and the real money supply are calculated as 318 0.05 2.5Y-8,769/ | = Now suppose that the central bank hikes the interest rate to 7%. In a graph of the IS-LM model, this causes the LM curve to shift (Round your response to the ne Following the change in the interest rate to 7%, the value of equilibrium real output becomes Following the change in the interest rate to 7%, 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 a contractionary monetary policy? As the interest rate rises, O A. the real demand for money falls. O B. the money supply decreases and equilibrium real output decreases. O C. equilibrium investment may increase, decrease, or remain unchanged. O D. equilibrium consumption decreases. With the central bank's contractionary monetary policy, the value of the real money supply becomes downward upward (Round your response to the nearest integer.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Consider
the following /S-LM model:
C = 245 +0.5YD
/ = 160+0.21Y-821/
G = 398
Y = 2,079
C = 1,126
| = 556
MIP = 4,759
T =
i =
MIP =
318
0.05
The /S equation is determined to be Y=2220.69-2831.03i.
The LM equation is given as / = 0.05
Initial equilibrium values of Y, C, I, and the real money supply are calculated as
1 =
2.5Y-8,769/
Now suppose that the central bank hikes the interest rate to 7%. In a graph of the IS-LM model, this causes the LM curve to shift
(Round your response to the ne
Following the change in the interest rate to 7%, the value of equilibrium real output becomes
Following the change in the interest rate to 7%, 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 a contractionary monetary policy?
As the interest rate rises,
O A. the real demand for money falls.
O B. the money supply decreases and equilibrium real output decreases.
O C. equilibrium investment may increase, decrease, or remain unchanged.
O D. equilibrium consumption decreases.
With the central bank's contractionary monetary policy, the value of the real money supply becomes
downward
upward
(Round your response to the nearest integer.)
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