Explain what hysteresis is and provide an analysis of What is the effect of an increase in the Treasury bill rate rising from 7% to 8%, and the government bonds rate from 9% to 11% in the below graph when the government expenditure is endogenous. The overall discussion should not be less than three paragraphs.compare this analysis to when the government expenditure is not endogenous as shown in the second graph. Changes in GDP from the steady state of interest rates 7% and 9%,to the new state of increased interest rates of 8% and 11%.Original Steady State value of GDP at 7-9% is 133.5The new value of steady state at 8-11% is 142.3144142140138136134132130102030 405060 70 809000 138137136135134133Changes in GDP from the steady state of interest rates 7% and 9%,to the new state of increased interest rates of 8% and 11% when theGovernment Expenditure is EndogenousOriginal Steady State value of GDP at 7-9% is 133.5The new value of steady state at 8-11% is 137.71020 30 4050 6070 8090800

The trajectory GDP graph is the path of GDP which is moving under given force of action. Given The…

Answered: Explain what hysteresis is and provide…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Problem 1QTC

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Explain what hysteresis is and provide an analysis of What is the effect of an increase in the Treasury bill rate rising from 7% to 8%, and the government bonds rate from 9% to 11% in the below graph when the government expenditure is endogenous.

The overall discussion should not be less than three paragraphs.

compare this analysis to when the government expenditure is not endogenous as shown in the second graph.

Changes in GDP from the steady state of interest rates 7% and 9%,
to the new state of increased interest rates of 8% and 11%.
Original Steady State value of GDP at 7-9% is 133.5
The new value of steady state at 8-11% is 142.3
144
142
140
138
136
134
132
130
10
20
30 40
50
60 70 80
90
00

138
137
136
135
134
133
Changes in GDP from the steady state of interest rates 7% and 9%,
to the new state of increased interest rates of 8% and 11% when the
Government Expenditure is Endogenous
Original Steady State value of GDP at 7-9% is 133.5
The new value of steady state at 8-11% is 137.7
10
20 30 40
50 60
70 80
90
8
00

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