Fill this two tables ( question b and C)please fill only table 3. The paradox of saving, one more timeSuppose the economy begins with output equal to its natural level. Then there is adecrease in consumer confidence as houscholds attempt to increase their saving for agiven level of disposable income.a. Draw the AS - AD and IS - LM diagrams. Indicate which curves shift in theshort run and medium run. Explain why the curves shift.b. What happens to output, the interest rate, and the price level in the short run?What happens to consumption, investment, and private saving in the short run?Please answer the first two questions by filling out the following table, indicatingwhether the above variables show one of the following behavior: rises; falls;ambiguous.YPCIPrivateShortrunIs it possible that the decline in consumer confidence will actually lead to a fall inprivate saving in the short run?c. Repeat the above exercises for the medium run. Please answer this question byfilling out the following table, indicating whether the variables in the medium runshow one of the following behavior : rises further ; falls further ; back to original;rises (above the original level); falls (below the original level); increases from theshort run but still lower than original level.YiCIPrivateMediumrunIs there any paradox of saving in the medium run?

a) As Consumers decrease their confidence. They start consuming less and saving more The MPC" will…

private saving in the short run? c. Repeat the above exercises for the medium run. Please answer this question by filling out the following table, indicating whether the variables in the medium run show one of the following behavior : rises further ; falls further; back to original; rises (above the original level); falls (below the original level); increases from the short run but still lower than original level. i P C Private Medium run Is there any paradox of saving in the medium run?

private saving in the short run? c. Repeat the above exercises for the medium run. Please answer this question by filling out the following table, indicating whether the variables in the medium run show one of the following behavior : rises further ; falls further; back to original; rises (above the original level); falls (below the original level); increases from the short run but still lower than original level. i P C Private Medium run Is there any paradox of saving in the medium run?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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