EBK EXPLORING MACROECONOMICS
7th Edition
ISBN: 9780100546400
Author: Sexton
Publisher: YUZU
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Chapter 5, Problem 10P
To determine
(a)
Refer to the given
Determine the shift or shifts in supply or demand could move the
To determine
(b)
Refer to the given supply and demand graph:
Determine the change in graph keeping E as the initial equilibrium point, if both the decrease in price of substitute in production and increase in income occurred, if it is a normal good
To determine
(c)
Refer to the given supply and demand graph:
Determine change keeping E as the equilibrium point, if both an increase in price of an input and advance technology occurred.
To determine
(d)
Refer to the given supply and demand graph:
Determine the point that would be quantity supplied and quantity demanded if the
To determine
(e)
Refer to the given supply and demand graph:
Determine the point tend to be the quantity supplied and quantity demanded if
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The figure to the right shows the economy initially in equilibrium at output
Upper Y 0Y0.
Suppose that the price level in the economy increases.
Using the line drawing tool, show the impact this increase has on the AE curve. Properly label this line
AE Subscript 1.
Note: Carefully follow the instructions above and only draw the required object.
According to your graph, the relationship between the price level and the level of aggregate output (income) is (indeterminate, positive, negative) --> pick one answer.picture is attached.
Use graph A on the right to determine what happens to the equilibrium values of the interest rate and output when there is
an increasean increase
in government spending (G) with the Fed changing the money supply
(M Superscript S)
by enough to keepby enough to keep
interest rates constantinterest rates constant.
1.) Using the 3-point curved line drawing tool, illustrate the impact of the
increaseincrease
in G. Properly label your curve.
2.) Using the line drawing tool, illustrate the impact of the Fed's money supply decision. Properly label your curve.
3.) Using the point drawing tool, identify the economy's new equilibrium point.
Use graph B on the right to determine what happens to the equilibrium values of the interest rate and output when there is
anan
increaseincrease
in
Upper GG
with no change in
the money supplythe money supply.
1.) Using either the 3-point curved line drawing tool to shift the IS curve or using the line drawing tool to shift the Fed rule…
Some economists argue that the "animal spirits" of investors are so important in determining the level of investment in the economy that interest rates do not matter at all.
Part 2
a. Suppose that this were
truelong dash—that
investment in no way depends on interest rates.
Using the line drawing tool, show what the investment curve would look like. Label the line 'I'.
is my answer correct?
Chapter 5 Solutions
EBK EXPLORING MACROECONOMICS
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