Macroeconomics (Cloth) (Instructor's)
10th Edition
ISBN: 9781319106003
Author: Mankiw
Publisher: MAC HIGHER
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Chapter 12, Problem 2QQ
To determine
The factor that causes both the income and the interest rate to fall under the IS-LM.
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The demand function for organic apples is given by Qd = 20 – 2P while the supply function is given by Qs = 4P – 10.a. Solve for the equilibrium P* and Q*.b. Carefully graph the D & S curves. Include all intercepts and P* and Q* (**enlarge your graph so you can better show the questions below use graphing paper**)i. Suppose that the government legislates a $1/gallon to be collected from the buyer. Identify the new equation for the demand curve. Plot the new demand curve (on the same graph as b).ii. Solve for the new equilibrium PT* and QT* and indicate on your graph. On the same graph, indicate the P that consumers pay (PC) and the P that producers get to keep (PS).c. On another graph with the original D and S curves, impose the same tax ($1/gallon) to sellers. Identify the new equation for the supply curve. Plot the new supply curve. i. Solve for the new equilibrium PT* and QT* and indicate on your graph. On thesame graph, indicate the P that consumers pay (PC) and the P that…
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Chapter 12 Solutions
Macroeconomics (Cloth) (Instructor's)
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