MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Chapter 13, Problem 5TY

a)

To determine

To Explain: The effect on GDP, when there is an increase in bank reserves by $5 billion , assuming that there is a reduction in rate of interest by 0.5 percentage point, with an increase in each $1 billion

b)

To determine

To Explain: The effect on GDP, when there is an increase in bank reserves by $5 billion , assuming that $30 billion worth of new investments are stimulated, for decline in interest rates of each 1 percentage point .

c)

To determine

To Explain: The effect on GDP, when there is an increase in bank reserves by $5 billion , assuming that the expenditure multiplier is two.

d)

To determine

To Explain: The effect on GDP, when there is an increase in bank reserves by $5 billion , assuming that the prices does not increase with an increase in demand.

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Now, let us assume that Brie has altruistic preferences. Her utility function is now given by: 1 UB (xA, YA, TB,YB) = (1/2) (2x+2y) + (2x+2y) What would her utility be at the endowment now? (Round off your answer to the nearest whole number.) 110
Problema 4 (20 puntos): Supongamos que tenemos un ingreso de $120 y enfrentamos los precios P₁ =6 y P₂ =4. Nuestra función de utilidad es: U(x1, x2) = x0.4x0.6 a) Planteen el problema de optimización y obtengan las condiciones de primer orden. b) Encuentren el consumo óptimo de x1 y x2. c) ¿Cómo cambiará nuestra elección óptima si el ingreso aumenta a $180?
Please draw the graph for number 4 and 5, I appreciate it!!
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