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.)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![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.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F97fb62d8-e08d-411b-87ff-db43cf9937bc%2F6ff72b71-74eb-496c-a085-02f0188e9729%2Fl1ttwo8_processed.png&w=3840&q=75)
Transcribed Image Text: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.)
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