We are in eqm in the full SR model, IS-LM. Following a single shock (so that only one curve shifts), cet. par., we see that the nominal interest rate has fallen and Y has risen then we know with certainty that the Fed has engaged in expansionary policy. True, False, or Uncertain? Show graph in i-Y space and explain fully

We are in eqm in the full SR model, IS-LM. Following a single shock (so that only one curve shifts), cet. par., we see that the nominal interest rate has fallen and Y has risen then we know with certainty that the Fed has engaged in expansionary policy. True, False, or Uncertain? Show graph in i-Y space and explain fully

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter14: Money And The Economy

Section: Chapter Questions

Problem 3WNG

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Assume that the IS-MP model on the right shows an economy that was in long-run macroeconomic equilibrium. Then, there was a significant positive demand shock 1.) Using the 3-point curved line drawing tool, show the effect of the positive demand shock. Properly label your curve 2) Using the line drawing tool, show how the Fed might respond to restore long-run equilibrium Properly label your curve Carefully follow the instructions above, and only draw the required objects Real interest rate Y=yP 10 MP₁ IS, Output gap odu
Consider the Keynesian sticky wage model. Consider a temporary increase in current produc- tivity, z. 1. Using graphs, show the effect of higher z on output, employment, prices, the real interest rate, and the real wage. 2. Consider the effect of the same shock in the monetary intertemporal model. Using graphs, show the effect of higher z on output, employment, prices, the real interest rate, and the real wage. 3. Compare the change in output and prices in the two models. 4. Explain and show graphically how, in the Keynesian model, monetary policy could be used to induce a change in output equivalent to that in the monetary intertemporal model.
2. Use the IS-LM model to predict the short-run effects of each of the following shocks on income, the interest rate, consumption, and investment. In each case, explain what the Fed should do to keep income at its initial level. Be sure to use a graph in each of your answers. a. After a new high-speed computer chip is invented, many firms decide to upgrade their computer systems. b. A wave of credit card fraud increases the frequency with which people make transactions in cash. c. A bestseller titled Retire Rich convinces the public to increase the percentage of their income devoted to saving. d. The appointment of a new dovish Fed chair increases expected inflation.
In the full SR model, IS-LM, we know that if to falls, cet. par., then the real Money Supply will increase. True, False, Uncertain? Explain. Show graphs in i-Y space and i-M/P spaces.
b. A wave of credit-card fraud increases the frequency with which people make A best-seller titled Retire Rich convinces the public to increase the percentage of their 19. Use the IS–LM model to predict the effects of each of the following shocks on income, the interest rate, consumption, and investment. In each case, explain what the Fed should do to keep income at its initial level. people make transactions in cash. с. income devoted to saving. CEthionia.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
"Consider the IS-MP model. Initially, there are no AD shocks and the Fed sets the (real) interest rate at R=4 percent. Graph the initial equilibrium and label it point A. Suppose now that consumers become pessimistic about the state of the economy and anticipate an imminent increase in unemployment rates. The Fed keeps its monetary policy unchanged. Shift the necessary curves in the IS-MP diagram and label the new equilibrium as point B. How will SRO be affected?" None of the other options "MP will shift down. Investment, actual GDP and SRO will all increase." "The IS will shift to the right. As a result, SRO will fall." "The IS will shift to the left. As a result, actual GDP will fall but SRO will remain unchanged."
a. Consider a Central Bank that cares equally about inflation and output. Use the 3 equation model to consider an economy that starts out at equilibrium. Suppose the IS curve shifts temporarily to the left i.e., a temporary negative demand shock hits the economy). Describe the dynamics of the economy back to equilibrium. Draw a properly labelled diagram. plz Answer ASAP. Show all steps to help me understand it clearly. Will give u a positive rating. :)
Use the IS-LM model to answer this question and assume that the central bank controls the interest rate. Suppose there is a simultaneous decrease in taxes and increase in interest rate. a. Explain what effect this particular policy mix will have on output and the money supply. b. Based on your analysis, do we know with certainty what effect this policy mix will have on investment? Explain.
Refer to the diagram to the right. Suppose the economy is in a recession and the Fed pursues an expansionary monetary policy. Using the static AD- AS model, this would be depicted as a movement from OA. C to B. OB. C to D. OC. B to C. OD. A to B. OE. A to E. Price leve A LRAS B D E C Real GDP AD ₁ SRAS AD 3 AD 2
Part 2 solution needed
i need in your own words point to point answer Draw the IS-LM and AD-AS diagrams and explain the following: a. Suppose Fed increases M. Show the short-run effects on your graphs.b. Show what happens in the transition from the short run to the long run.c. How do the new long-run equilibrium values of the endogenous variables compare to their initial values?