Use the IS-LM model to explain and show how the level of income and the rate of interest are affected by each of the following changes in a closed economy respectively:

(a)    An autonomous decline in investment spending.   

(b)    An increase in money supply.   

(c)    An increase in government expenditure financed by an equal amount in taxes.

The U.S. federal budget is the focal point for debate on the role of government. Identify and explain one argument for and against increased government spending. Which side do you tend to agree with and why? This is not intended to be a political discussion, so let's keep our focus on the economic implications

In the neoclassical model, low inflation is good because _________________.

Select the correct answer below:

it provides a better climate for government to increase spending

it provides a better climate for businesses to increase their prices

it provides a better climate for a healthy and growing economy.

it reduces the need for bank supervision and oversight.

Consider a closed economy, where the marginal propensity to consume is 0:9. What would be the e§ect on private, public and national saving of a $10 million decrease in both taxes and government spending? Would the equilibrium real interest rate increase, decrease, or stay the same?

Part B

The purchasing manager and the production manager are waiting for the report on the June 2013 variances. Assume that the price, spending, and rate variances are all favourable, but that the quantity and efficiency variances are unfavourable. Briefly explain how the purchasing manager and production manager will each interpret the June variances.                                                                              

The Fed uses monetary policy to affect the supply and demand for money. The monetary policy affects interest rates, aggregate spending and economic growth. Discuss whether the Fed’s policies have the power to prevent recessions. Should the Fed intervene to prevent recessions? please do not plagiarize.

Assume that an effective government-imposed price on a particular good. The price is set below equilibrium. Now, let the imposed price be removed. True, False, or Uncertain: Consumer spending on the good will increase only if demand is inelastic.

Explain your answer. TRUE FALSE Uncertain Explanation:

Fiscal policy: If the concern is increasing GDP, why wouldn't a government want to pursue the policy of just increasing spending indefinitely to avoid ever having decreases in GDP?

Consider the effect on interest rates and investment, also consider the worthiness of pursing increased GDP as a singular goal.

1.In the long-term nominal Overnight policy

rate(opr) or the long-term real OPR that influences spending decisions? Explain why?

2.how does the market determine the long term nominal OPR and why doesnt is move

as much as the short term OPR