Suppose that the following equations describe goods and money market equilibrium (symbols are as defined in the lecture notes). IS curve: i = 200 – 2*Y; LM curve: i = - 400 + 6*Y. Compared to the initial equilibrium position, which of the following could have happened if equilibrium output is now 50 and the equilibrium interest is now 25? increase in money supply O increase in government spending
Suppose that the following equations describe goods and money market equilibrium (symbols are as defined in the lecture notes). IS curve: i = 200 – 2*Y; LM curve: i = - 400 + 6*Y. Compared to the initial equilibrium position, which of the following could have happened if equilibrium output is now 50 and the equilibrium interest is now 25? increase in money supply O increase in government spending
Chapter20: Exchange Rates And The Macroeconomy
Section: Chapter Questions
Problem 3TY
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![Suppose that the following equations describe goods and money market
equilibrium (symbols are as defined in the lecture notes). IS curve: i = 200
- 2*Y; LM curve: i = - 400 + 6*Y. Compared to the initial equilibrium
position, which of the following could have happened if equilibrium output
is now 50 and the equilibrium interest is now 25?
increase in money supply
increase in government spending
increase in income taxes
all of the above
O none of the above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc0ca75e-ce2f-47f1-a94e-e3bd5633bed0%2F6a1320e1-1e9a-4b97-bc5a-8bae710486b0%2F3xkuytl_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose that the following equations describe goods and money market
equilibrium (symbols are as defined in the lecture notes). IS curve: i = 200
- 2*Y; LM curve: i = - 400 + 6*Y. Compared to the initial equilibrium
position, which of the following could have happened if equilibrium output
is now 50 and the equilibrium interest is now 25?
increase in money supply
increase in government spending
increase in income taxes
all of the above
O none of the above
![Suppose that the following equations describe a hypothetical economy
(symbols are as defined in the lecture notes): C = 2000 + 0.6*YD; T =
2000; I = 2000 – 10*i; G = 1000; M = 5000; P = 2; L = 2*Y – 0.5*i. There is
an excess supply of goods when the interest rate is 40 and output is
6,800
8,500
O 10,200
all of the above
none of the above](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdc0ca75e-ce2f-47f1-a94e-e3bd5633bed0%2F6a1320e1-1e9a-4b97-bc5a-8bae710486b0%2Fczsqchz_processed.png&w=3840&q=75)
Transcribed Image Text:Suppose that the following equations describe a hypothetical economy
(symbols are as defined in the lecture notes): C = 2000 + 0.6*YD; T =
2000; I = 2000 – 10*i; G = 1000; M = 5000; P = 2; L = 2*Y – 0.5*i. There is
an excess supply of goods when the interest rate is 40 and output is
6,800
8,500
O 10,200
all of the above
none of the above
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