15. Suppose there is an increase in autonomous consumption. • How would this shock impact a...

15. Suppose there is an increase in autonomous consumption.

• How would this shock impact a standard classical model? Written discussion and graphs are both needed for full credit. Be sure to mention what happens to W P , Y, N, P, r, C, S, P rS, P uS

Note: Assume that change in investment does not impact the capital stock.

Expectations are as follows:

• Capture the timing in your written discussion

• If a curve shifts, explain why/economic intuition

• If a market is in disequilibrium, explain how it returns to equilibrium

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

1. Explain the concept of autonomous consumption.2. Identify factors that would cause consumption spending to...

1. Explain the concept of autonomous consumption.2. Identify factors that would cause consumption spending to increase. What effect would that have on aggregate demand?

1. Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. Then...

1. Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. Then the consumption function is given by a. C = 400 - 0.8Yd b. C = -400 + 0.2Yd c. C = 320 x Yd d. C = 400 + 0.8Yd e. C = 400 + 0.2Yd 2. Suppose that the MPC is equal to 0.8 and autonomous consumption spending is 400. At what level of income is saving = 0? a. 400 b. 500...

Describe how cardiogenic shock would impact cardiac output and mean arterial pressure, then describe how the...

Describe how cardiogenic shock would impact cardiac output and mean arterial pressure, then describe how the autonomic nervous system would respond to this. How could this response be potentially detrimental to both the heart and organs?

If there is an increase in the quick ratio, how would this impact the bond’s rating...

If there is an increase in the quick ratio, how would this impact the bond’s rating and yield to maturity?

Explain if there is an increase in the operating margin, how would this impact the bond’s...

Explain if there is an increase in the operating margin, how would this impact the bond’s rating and yield to maturity?

15. When taxes increase, consumption decreases. How is this situation represented in the aggregate demand and aggregate...

15. When taxes increase, consumption decreases. How is this situation represented in the aggregate demand and aggregate supply model? a. by a movement to the left along a given aggregate-demand curve b. by shifting aggregate demand to the left c. by shifting aggregate supply to the left d. by a movement to the right along a given aggregate-demand curve 16. What happens to prices and output when the long-run aggregate-supply curve shifts right? a. Prices and output both increase. b. Prices and...

If a nation chooses to reduce consumption and increase investment, how would this affect economic growth?...

If a nation chooses to reduce consumption and increase investment, how would this affect economic growth? In addition to investment in physical and human capital, what other public policies might a country adopt to increase productivity?

If a nation chooses to reduce consumption and increase investment, how would this affect economic growth?...

Question 5 Consider a simple Keynesian model without government spending or taxation. Suppose autonomous consumption is...

Question 5 Consider a simple Keynesian model without government spending or taxation. Suppose autonomous consumption is 500 and autonomous investment is 300 and the equilibrium level of output is 2400.Then the marginal propensity to consume is: a. 2/3 b. 3/5 c. Uncertain,not enough information d. 3 Question 6 Suppose real GDP is growing at 4%per year and velocity is stable.According to the quantity theory of money,a central bank that wants to achieve inflation of 2%per year should: a. Shrink the...

In a demand shock. Specifically an investment shock. How would the central bank remedy it? money...

In a demand shock. Specifically an investment shock. How would the central bank remedy it? money supply? interest rates? please explain.. thanks

Subjects