Consider an economy described by the following: a. Derive expressions for the MP curve and the AD curve. The expression for the MP curve is: OA. 7=1.5+0.8. OB. 7=3+0.8 C. r= 1.5+ 1x OD. 7=3+1x. The expression for the AD curve is: O A. Y=14-1.3. OB. Y 17.5-1.3. OC. Y=14-2x. O D. Y=17.5-2. = $3 trillion 7 = $1.3 trillion G = $3.5 trillion T = $3 trillion In order to keep output constant, the Bank will have to NX = S-1 trillion 7 = 1 b. Assume that =2. The real interest rate is %. (Round your response to two decimal places.) The equilibrium level of output is $trillion. (Round your response to two decimal places.) c. Suppose government spending increases to $4 trillion. What happens to equilibrium output? Equilibrium output will to S trillion. (Round your response to two decimal places.) d. If the Bank of Canada wants to keep output constant, then what monetary policy change should it make? mpc = 0.8 d = 0.3 x = 0.1 λ = 1 7 = 1.5 the real interest rate to r= %. (Round your response to two decimal places.)

Consider an economy described by the following: a. Derive expressions for the MP curve and the AD curve. The expression for the MP curve is: OA. 7=1.5+0.8. OB. 7=3+0.8 C. r= 1.5+ 1x OD. 7=3+1x. The expression for the AD curve is: O A. Y=14-1.3. OB. Y 17.5-1.3. OC. Y=14-2x. O D. Y=17.5-2. = $3 trillion 7 = $1.3 trillion G = $3.5 trillion T = $3 trillion In order to keep output constant, the Bank will have to NX = S-1 trillion 7 = 1 b. Assume that =2. The real interest rate is %. (Round your response to two decimal places.) The equilibrium level of output is $trillion. (Round your response to two decimal places.) c. Suppose government spending increases to $4 trillion. What happens to equilibrium output? Equilibrium output will to S trillion. (Round your response to two decimal places.) d. If the Bank of Canada wants to keep output constant, then what monetary policy change should it make? mpc = 0.8 d = 0.3 x = 0.1 λ = 1 7 = 1.5 the real interest rate to r= %. (Round your response to two decimal places.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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