Using the macro model we learned in this class (MP-IS and AD-AS framework) consider the current crisis. 1. Identify the basic impacts of the Covid shutdowns on the macro economy. Explain how and why each curve will be affected. Graphically show your analysis. 2. Consider the monetary policy responses to the current crisis. Develop separate analysis for an economy which have positive policy rates vs an economy which is at the zero lower bound. Would it require different monetary policies? If so how? What would you expect to happen to the inflation rate, unemployment rate, economic growth in the near future? Use graphs for each case.

Using the macro model we learned in this class (MP-IS and AD-AS framework) consider the current crisis. 1. Identify the basic impacts of the Covid shutdowns on the macro economy. Explain how and why each curve will be affected. Graphically show your analysis. 2. Consider the monetary policy responses to the current crisis. Develop separate analysis for an economy which have positive policy rates vs an economy which is at the zero lower bound. Would it require different monetary policies? If so how? What would you expect to happen to the inflation rate, unemployment rate, economic growth in the near future? Use graphs for each case.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter27: Issues In Macroeconomic Theory And Policy

Section: Chapter Questions

Problem 4P

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Using the macro model we learned in this class (MP-IS and AD-AS framework) consider the current crisis. Consider the monetary policy responses to the covid pandemic crisis. Develop separate analysis for an economy which have positive policy rates vs an economy which is at the zero lower bound. Would it require different monetary policies? If so how? What would you expect to happen to the inflation rate, unemployment rate, and economic growth in the near future? Use graphs for each case.
The image i have attached is of an ISLMPC curve for exogenous money, can you draw a ISLMPC model with endogenous money similar to the one attached but for endogenous money. That shows the effect of a monetary policy shock , like a decrease in interest rates resulting in shifts in the graph , showing the changes due to the shocks
No written by hand solution
1) Inflation in Theoretica is currently below the target range of its central bank. What does this tell you regarding Theoretica’s likely output gap? Illustrate it using an AS-AD diagram, and briefly explain your diagram 2) Your mother states that lowering interest rates in the recessionary COVID-19 period is good policy because it will guarantee consumers will spend more as it is cheaper to borrow money. Do you agree or disagree with her statement? Provide two reasonings to justify your answer. 3) Is either helicopter money or quantitative easing preferred in times of severe recessions in order to boost economic activity? Explain your reasoning.
← 2:12 Principles of Macroe... Vo LTE 4G+ R vecmeccssary: what would have happened to aggregate demand and aggregate output: 6 Consider two economies - Avalon and Eternia. In Avalon, the central bank uses interest rates to conduct monetary policy. In Eternia, the central bank conducts monetary policy by changing the money supply. a Which economy would have a more effective monetary policy? Explain. b Which country would have higher inflation? Explain. 33% c Why can't Avalon and Eternia set both interest rates and money supply? 7 This chapter explains that expansionary monetary policy reduces the interest rate and thus stimulates demand for consumption and investment goods. Explain how such a policy also stimulates imports, exports and overall net exports. (You may need to refer to chapter 13 to answer this question.) 8 Suppose economists observe that an increase in government spending of $10 billion raises the total demand for goods and services by $30 billion. a Is crowding out…
Pls help with the below homework, select the correct option. Which of the following is NOT true in the monetary intertemporal model? A.When an economic agent buys some goods with a credit card, the economic agent acquires a debt with the bank that is paid off, at zero interest, at the end of the current period. B.The supply of money is determined by the central bank. C.Interest rates are determined by the government. D.Payments by credit card would work as an alternative to currency in transactions. E.The demand for money in the model will be determined by the behavior of the representative consumer and the representative firm.
Suppose two countries have identical aggregate demandcurves and potential levels of output, and g is the samein both countries. Assume that in 2019, both countriesare hit with the same negative supply shock. Given thetable of values below for inflation in each country, whatcan you say, if anything, about the credibility of eachcountry’s central bank? Explain your answer.Country A Country B2018 3.0% 3.0%2019 3.8% 5.5%2020 3.5% 5.0%2021 3.2% 4.3%2022 3.0% 3.8%
COURSE: MACROECONOMICS - IS-LM MODEL Analyze and plot IN DETAIL the effect on the money market caused by an increase in the sensitivity of money demand to the level of income (i.e. "k*Y" in the equation of the money Market L = k*Y - h*i). Then, explain and plot how the equilibrium changes in the IS-LM model.
On June 5, 2003, the European Central Bank acted to decreasethe short-term interest rate in Europe by half a percentagepoint, to 2 percent. The bank’s president at the time, WillemDuisenberg, suggested that, in the future, the bank could reducerates further. The rate cut was made because European coun-tries were growing very slowly or were in recession. What effectdid the bank hope the action would have on the economy? Bespecific. What was the hoped-for result on C, I, and Y?
A5
WHAT THE FISCAL AND MONETAARY POLICIES DID THE USA GOVERNMENT PURSUE TO COMBAT THR FINANCIAL CRISES ON 2008 AND PANDEMIC CRISES IN 2020? AND HOW WOULD YOU MODEL THE EFFECTS OF THESE POLICIES IN IS\LM AND AD\ AS MODELS?
Please no written by hand solution Consider a scenario of a closed economy in the short run where price level is fixed. Assume that bothtaxes and money supply increase in a way that keep output constant in equilibrium (suppose that themarginal propensity to consume is less than one). Which of the following may result from the policychange?a) It will lead to an increase in investment but a decrease in consumption.b) It will result in an increase in investment but a decrease in government spending.c) It will lead to an increase in investment and private saving.d) It will decrease investment but increase in public saving.