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An economy can described as C=100+((2)/(3))(Y-T) I=800-((50)/(3))r ((M)/(P))^(d)=0.5Y-50r G=500 T=600 M=1200 P=1 a. (4 points) Solve- for IS and LM curve and solve for the equilibrium income and interest rate for this economy. b. (4 points) If tax increased to 720 , solve for the new equilibrium. c. (4 points) What is the tax multiplier for this economy? According to the tax multiplier (if we ignore the changes in the money market), what is the new income level? You compare the results in part b) and c), explain the differences in the income level. d. (4 points) With the tax increase, in order to keep the income to the original level, the central bank should increase or decrease the money supply and by how much? e. (4 points) Assume the economy is at the equilibrium level of Part a) (money supply is M=1200 ), there is cost push shock makes the price level increase P=3, calculate the new short run equilibrium income and interest rate. Assume in an economy the Philips curve is pi =Epi -0.5(u-0.05). a. (5 points) Assume Epi =pi _(-1). The economy was at its natural level of unemployment initially. However, the economy has a relatively high level 1An economy can described as C=100+ Y-T I=800 =0.5Y-50r G=500 T=600 M1200 P=1 and interest rate for this economy b. 4 points If tax increased to 720,solve for the new equilibrium. c.4 points What is the tax multiplier for this economy According to the tax multiplier (if we ignore the changes in the money market,what is the new differences in the income level. income level? You compare the results in part b and c, explain the d.4 points With the tax increase, in order to keep the income to the original how much? level, the central bank should increase or decrease the money supply and by e.4 pointsAssume the economy is at the equilibrium level of Part a(money P-3,calculate the new short run equilibrium income and interest rate. supply is M-1200,there is cost push shock makes the price level increase 2Assume in an cconomy the Philips curve is n=En-0.5u-0.05 a.5 points Assume En=n-.The cconomy was at its natural level of unemployment initially.However,the economy has a relatively high level

          An economy can described as
C=100+((2)/(3))(Y-T)
I=800-((50)/(3))r
((M)/(P))^(d)=0.5Y-50r
G=500
T=600
M=1200
P=1
a. (4 points) Solve- for IS and LM curve and solve for the equilibrium income and interest rate for this economy.
b. (4 points) If tax increased to 720 , solve for the new equilibrium.
c. (4 points) What is the tax multiplier for this economy? According to the tax multiplier (if we ignore the changes in the money market), what is the new income level? You compare the results in part b) and c), explain the differences in the income level.
d. (4 points) With the tax increase, in order to keep the income to the original level, the central bank should increase or decrease the money supply and by how much?
e. (4 points) Assume the economy is at the equilibrium level of Part a) (money supply is M=1200 ), there is cost push shock makes the price level increase P=3, calculate the new short run equilibrium income and interest rate.
Assume in an economy the Philips curve is pi =Epi -0.5(u-0.05).
a. (5 points) Assume Epi =pi _(-1). The economy was at its natural level of unemployment initially. However, the economy has a relatively high level
1An economy can described as
C=100+ Y-T
I=800
=0.5Y-50r G=500 T=600 M1200 P=1
and interest rate for this economy b. 4 points If tax increased to 720,solve for the new equilibrium. c.4 points What is the tax multiplier for this economy According to the tax multiplier (if we ignore the changes in the money market,what is the new differences in the income level. income level? You compare the results in part b and c, explain the d.4 points With the tax increase, in order to keep the income to the original how much? level, the central bank should increase or decrease the money supply and by e.4 pointsAssume the economy is at the equilibrium level of Part a(money P-3,calculate the new short run equilibrium income and interest rate. supply is M-1200,there is cost push shock makes the price level increase 2Assume in an cconomy the Philips curve is n=En-0.5u-0.05 a.5 points Assume En=n-.The cconomy was at its natural level of unemployment initially.However,the economy has a relatively high level

an economy can described as c10023y t i800 503r mpd05y 50r g500 t600 m1200 p1 a 4 points solve for is and lm curve and solve for the equilibrium income and interest rate for this economy b 4 01234

Added by Victor Manuel D.

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