Suppose the investment is very sensitive to the interest rate.That is, the function I(r), used to...

Suppose the investment is very sensitive to the interest rate.That is, the function I(r), used to derive the IS curve, is very steep.

Graphically derive the IS curve in the closed economy. What can you say about the steepness IS curve?

In this context, which policy do you think is likely to be more effective? Fiscal policy or monetary policy?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose the investment is very sensitive to the interest rate.That is, the function I(r), used to...

Suppose the investment is very sensitive to the interest rate.That is, the function I(r), used to derive the IS curve, is very steep. Graphically derive the IS curve in the closed economy. What can you say about the steepness IS curve? In this context, which policy do you think is likely to be more effective? Fiscal policy or monetary policy? (Hint: make use of your answer to question 1)

Suppose the investment is very sensitive to the interest rate.That is, the function I(r), used to...

Suppose the investment is very sensitive to the interest rate.That is, the function I(r), used to derive the IS curve, is very steep (that is, when we graph it with r on the vertical axis, it is very flat, almost horizontal). Graphically derive the IS curve in the closed economy. What can you say about the steepness IS curve? In this context, which policy do you think is likely to be more effective? Fiscal policy or monetary policy?

When investors are very pessimistic about the future, investment is not sensitive to interest rates. How...

When investors are very pessimistic about the future, investment is not sensitive to interest rates. How does this affect the IS curve? If the government intends to stimulate the economy, which policy (monetary/ fiscal) will be effective in this case and which will be not? Explain using the LM/IS diagram.

Can you please check my work? I used R but it's very basic. I searched for...

Can you please check my work? I used R but it's very basic. I searched for this question on Chegg to check my answer but my numbers are slightly different. What did I do wrong? Question: Calculate confidence intervals for population variance and standard deviation. Assume that samples are simple random samples and taken from a normal population. α=0.05, sample size=30,s=3.5 stdev =3.5 df = 29 n = 30 alpha = 0.05 qchisq(0.05,df,lower.tail = FALSE) onechi <- 42.55679 #[1] 42.55697...

A probability density function on R is a function f :R -> R satisfying (i) f(x)≥0...

A probability density function on R is a function f :R -> R satisfying (i) f(x)≥0 or all x e R and (ii) \int_(-\infty )^(\infty ) f(x)dx = 1. For which value(s) of k e R is the function f(x)= e^(-x^(2))\root(3)(k^(5)) a probability density function? Explain.

Suppose that in manufacturing a very sensitive electronic component, a company and its customers have tolerated...

Suppose that in manufacturing a very sensitive electronic component, a company and its customers have tolerated a 2% defective rate. Recently, however, several customers have been complaining that there seem to be more defectives than in the past. Given that the company has made recent modifications to its manufacturing process, it is wondering if in fact the defective rate has increased from 2%. For quality assurance purposes, you decide to randomly select 1,000 of these electronic components before they are...

Let A∈Mn(R)"> A ∈ M n ( R ) A∈Mn(R) such that I+A"> I + A I+A is invertible. Suppose that

Let A∈Mn(R)A∈Mn(R) such that I+AI+A is invertible. Suppose thatB=(I−A)(I+A)−1B=(I−A)(I+A)−1(a) Show that B=(I+A)−1(I−A)B=(I+A)−1(I−A) (b) Show that I+BI+B is invertible and express AA in terms of BB.

Suppose that the money demand function takes the form (??)?=?(?,?)=?/5? where ?i is the nominal interest...

Suppose that the money demand function takes the form (??)?=?(?,?)=?/5? where ?i is the nominal interest rate, and ?Y is the real output (income). a. If output grows at a rate of g, and the nominal interest rate is constant, the demand for real balances will grow at a rate of b. What is the velocity of money in this economy? (Note that the equation will be case sensitive. Please use the case indicated by the text.) V = c....

Suppose workers are not very sensitive to unemployment. The result will be that inflation will jump a lot every time inflation changes.

TRUE OR FALSEa) Suppose workers are not very sensitive to unemployment. The result will be that inflation will jump a lot every time inflation changes.b) If in short-run equilibrium inflation is greater than expected inflation, then it must be true that output is less than potential output.c) The economy may be away from its medium-run equilibrium for a while because actual inflation rates take a while to adjust.d)Suppose the economy starts from the (potential output, expected inflation) point. A leftward...

Suppose a function f : R → R is continuous with f(0) = 1. Show that...

Suppose a function f : R → R is continuous with f(0) = 1. Show that if there is a positive number x0 for which f(x0) = 0, then there is a smallest positive number p for which f(p) = 0. (Hint: Consider the set {x | x > 0, f(x) = 0}.)

Subjects