EBK MACROECONOMICS
10th Edition
ISBN: 9780134896571
Author: CROUSHORE
Publisher: VST
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Question
Chapter 13, Problem 4AP
a)
To determine
To know: The effect of supply shock on country’s net exports.
b)
To determine
To know: The effect on net exports when there is temporary increase in money supply.
c)
To determine
To check: Whether prediction made is confirmed or contradicted about spending behavior.
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Students have asked these similar questions
Suppose the U.S. has an investment opportunity which costs $200 which will increase output from 100
to 110 per quarter. The investment would take effect after t = 0. What is the marginal product of
capital (MPK)? What is the difference in the present value of future income in the U.S. of undertaking
the investment if the real world interest rate is 8%? Should the U.S. borrow from abroad to fund the
investment and why?
TYPO*. Increased output from 100 to 110 per YEAR
(not quarter).
Consider a closed economy.
Consider the effects of an increase of LFD in the
loanable funds market.
In terms of the absolute value, its SRGE effects on y*
is
its LRGE effects on y*.
Here it = an increase of LFD in the loanable funds
market.
Hint:
You need to read the lecture notes of 4:3 General
Equilibrium Effects - Notes.pdf
either larger than, or small than, or the same as
O larger than
smaller than
the same as
In the classical model with a closed economy, if the interest rate is too low, then investment is too
compared to savings; as a result, the interest rate will
high; rise
high; fall
low; rise
O low; fall
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