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ECON105week4questions - Using a NS/NAF graph show what...

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QUESTION 1 Imagine the economy is stable in long-run equilibrium. Then a union gets higher wages for its workers. What are the economy's long-run options (solutions) in getting the economy back to potential? QUESTION 2 Imagine a closed economy (no trade), with the following parameters: Co = 5, Io = 15, Go = 50, b = 0.75, t = 0.2. Find and graph the equilibrium income using the AE/Y graph. What marginal propensity to spend will increase the equilibrium income by 25? QUESTION 3
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Unformatted text preview: Using a NS/NAF graph, show what happens immediately when consumers reduce their willingness to save. Also, derive the equation for AE = Y from NS = NAF. QUESTION 4 Assume the economy is initially at potential. Using an AD/AS/LRAS graph, show what happens immediately and in the short-run as a result of MPImport rising. Comment on the economy's long-run options, and their advantages and disadvantages. ECON105 week 4 questions Eldar Sehic SFU 2009-3...
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