QUESTION 5 "Suppose the parameters of the IS curve are a-0,b-3/4, and r= 2%. Suppose further that initially the real interest rate R-2%. Draw the diagram for the IS curve and recall "a"" is a collection of terms (aC, aG, and so on). Suppose the real interest rate rises by 2 percentage points, from 2% to 4%. What will happen to SRO?" Decrease by 1 percentage point Increase by 1 percentage point Decrease by 2 percentage points Increase by 2 percentage points Decrease by 1.5 percentage points Increase by 1.5 percentage points QUESTION 6 "Suppose the parameters of the IS curve are a 0,b=3/4, and r = 2%. Suppose further that initially the real interest rate R-2%. Draw the diagram for the IS curve and recall "a" is a collection of terms (aC, aG, and so on). Suppose the government announces a temporary elimination of the sales tax. As a result, aC increases by 1 percentage point, from 70% to 71%. Assuming the Fed keeps interest rates constant, what will happen to SRO?" Decrease by 1 percentage point Increase by 1 percentage point Decrease by 2 percentage points Increase by 2 percentage points Decrease by 1.5 percentage points Increase by 1.5 percentage points

QUESTION 5 "Suppose the parameters of the IS curve are a-0,b-3/4, and r= 2%. Suppose further that initially the real interest rate R-2%. Draw the diagram for the IS curve and recall "a"" is a collection of terms (aC, aG, and so on). Suppose the real interest rate rises by 2 percentage points, from 2% to 4%. What will happen to SRO?" Decrease by 1 percentage point Increase by 1 percentage point Decrease by 2 percentage points Increase by 2 percentage points Decrease by 1.5 percentage points Increase by 1.5 percentage points QUESTION 6 "Suppose the parameters of the IS curve are a 0,b=3/4, and r = 2%. Suppose further that initially the real interest rate R-2%. Draw the diagram for the IS curve and recall "a" is a collection of terms (aC, aG, and so on). Suppose the government announces a temporary elimination of the sales tax. As a result, aC increases by 1 percentage point, from 70% to 71%. Assuming the Fed keeps interest rates constant, what will happen to SRO?" Decrease by 1 percentage point Increase by 1 percentage point Decrease by 2 percentage points Increase by 2 percentage points Decrease by 1.5 percentage points Increase by 1.5 percentage points

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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