Exercise 11.11 Optional: Suppose the central bank's monetary policy sets the interest rate accord- ing to the function: i = 3.0+2.0( – n*) with t* = 4.0, %3D and aggregate expenditure is the sum of: C= 200+0.75Y I = 85 – 2i G= 100 X – IM = 50 –0.15Y - 3i (a) What is the equation for the ADA curve? (b) Plot the ADn curve in a diagram, not necessarily to scale, that shows the horizontal intercept and slope of the curve.

Exercise 11.11 Optional: Suppose the central bank's monetary policy sets the interest rate accord- ing to the function: i = 3.0+2.0( – n) with t = 4.0, %3D and aggregate expenditure is the sum of: C= 200+0.75Y I = 85 – 2i G= 100 X – IM = 50 –0.15Y - 3i (a) What is the equation for the ADA curve? (b) Plot the ADn curve in a diagram, not necessarily to scale, that shows the horizontal intercept and slope of the curve.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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