56 - Short “Fi'v’e Questions — Be brief and precise...

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Unformatted text preview: Short “Fi'v’e Questions — Be brief and precise in your answers. For questions that require graphs, be sure to label the axis, and the curves. You will automatically receive a 0.5 point penalty for any curve or axis you fail to label or mislabel. For questions that require math, Show your work. For the following question assume that nominal wages are fixed and that prices are flexible. 1a. Suppose consumption and investment are given by the following equations: 0 = 200 + 0.75YD (3} I 2 1000 — 25?" (4) and that G = T 2—— 100. Write the numerical formula for the IS curve, writing Y as a function of r. (5 pts) W 1 .T» ”r“ - f M M £5" (a magi) filer: m ifilies, "i“ We s“ my; 1-». 0 (name) Wis-Wm U : Woo w lOOa' _} 1b. Suppose that money supply is equal to 1000, price is equal to 1, and money demand is given by: Md : 0.5Y — 1002". (5) Write the numerical formula for the LM curve, writing Y as a function of r. (5 pts) 1 . \l ”" ‘1?“(Ms “ ii, are,» 2 a. i f m as lac-mi: \f t ' 7 g lfiai} ‘5' E SE 5' e if?" it “if Essa var-tea 2i , “Awe-1 ”3434th." ; ‘ WM mp. _-=..~v :M 1c. Given the information in 1a and 1b, what is the equilibrium interest rate and output for this economy? (5 pts) ”ffiofi tiger?“ ii? {1.3% “’”‘ iafifi r" Foo 6“” J E1 in? G W . «W 3e 33“ *3“ w a, {59 e: "_ K ww- r r 59 a? 5 emaaafi mil-Q a?» ' . 1"“ 9.15 . 5 from +-ess,vfi:3 b E \ $33. erg?" 449‘: I). i ates -« Ma (4653:; ...
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