For the following problems, SHOW YOUR WORK and round to one decimal point. If you struggle with the math, still try to intuitively and graphically answer C and D. Consider an economy with the following data: C(Y-T) 125+0.75(Y-T) 1-2 00-10r G is the level of government purchases, T-100 MS-800 and the price level is P MD-P(0.8Y-16(r + x)) Please note the simplified consumption and investment functions (ignoring wealth and r effect on C, and Y effect on I). Note also that the initial price level and government purchases are some constant P and G, respectively and assume expected inflation-NX-0. Let the full employment level of output-1,600. A) Construct the IS curve, simplifying the expression as much as possible, solving for Y. B) The LM curve can be represented as Y- 20 r + 1000/P. Let G-250 and P-1. Solve for the short run equilibrium level of r* and Y. C) Use the space below to illustrate your short run equilibrium in B), including your numerical answers where possible on your diagram, including an accurate label for YOT. Calculate the r that will adjust over time to the

For the following problems, SHOW YOUR WORK and round to one decimal point. If you struggle with the math, still try to intuitively and graphically answer C and D. Consider an economy with the following data: C(Y-T) 125+0.75(Y-T) 1-2 00-10r G is the level of government purchases, T-100 MS-800 and the price level is P MD-P(0.8Y-16(r + x)) Please note the simplified consumption and investment functions (ignoring wealth and r effect on C, and Y effect on I). Note also that the initial price level and government purchases are some constant P and G, respectively and assume expected inflation-NX-0. Let the full employment level of output-1,600. A) Construct the IS curve, simplifying the expression as much as possible, solving for Y. B) The LM curve can be represented as Y- 20 r + 1000/P. Let G-250 and P-1. Solve for the short run equilibrium level of r* and Y. C) Use the space below to illustrate your short run equilibrium in B), including your numerical answers where possible on your diagram, including an accurate label for YOT. Calculate the r that will adjust over time to the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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