Question: Define general equilibrium and show the general equilibrium point in the IS-LM diagram. If the economy is not in general equilibrium, what determines output and

Define general equilibrium and show the general equilibrium point in the IS-LM diagram. If the economy is not in general equilibrium, what determines output and the real interest rate? What economic forces act to bring the economy back to general equilibrium?

Step by Step Solution

★★★★★

3.40 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

General equilibrium is a situation in which all markets in an economy are simultaneously in e... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

797-B-E-M-E (7853).docx

120 KBs Word File

Students Have Also Explored These Related Economics Questions!

In the accompanying diagram, the economy is in short run macroeconomic equilibrium at point E1. Based on the diagram answer the following questions. Is the economy facing an inflationary or a...

The production function in an economy is Y = A(5N- 0.0025N2), where A is productivity. With this production function, the marginal product of labour is MPN = 5A- 0.005AN. Suppose that A = 2. The...

Q#1. Explain Business cycle and cyclical behavior of macroeconomic variables (direction and timing)? Q#2 When a recession occurs, do economists expect it to be a temporary phenomenon? Or is there...

Q#1. Explain Business cycle and cyclical behavior of macroeconomic variables (direction and timing)? Q#2 When a recession occurs, do economists expect it to be a temporary phenomenon? Or is there s...

Define general equilibrium and show the general equilibrium point in the ISLM diagram. If the economy isnt in general equilibrium, what determines output and the real interest rate? What economic...

5. Define general equilibrium and show the general equilibrium point in the IS-LM diagram. If the economy isn't in general equilibrium, what determines output and the real interest rate? What...

1. Explain Business cycle and cyclical behavior of macroeconomic variables (direction and timing)? 2. When a recession occurs, do economists expect it to be a temporary phenomenon? Or is there some...

Q#1. Explain Business cycle and cyclical behavior of macroeconomic variables (direction and timing)? Q#2 When a recession occurs, do economists expect it to be a temporary phenomenon? Or is there...

Q#2 When a recession occurs, do economists expect it to be a temporary phenomenon? Or is there some degree of permanence? What is the empirical evidence? Q#3 What is the business cycle? Graph the...

What is meant by self-regulation? How is self-regulation for the profession being affected in the post-Enron environment?

A. TASK Write a report (maximum 1,250 words, including any references) to inform an association of SMEs (small and medium-sized enterprises) of the significance of the Consumer Guarantees Act 1993...

With long - term debt at its highest level ( as a percent of total assets ) in the most recent period, should analysts be concerned about cash flow issues or bankruptcy?

Which nonparametric test can be used as an alternative to the one-sample t test? a. the one-sample sign test b. the Mann-Whitney U test c. the Kruskal-Wallis H test d. the Friedman test

1. Arrow up or down: A tax on soft drinks will ______the marginal bang per buck on soft drinks and ______the consumption of goods for which the is now higher. 2. Arrow up or down: The selling of...

1. Dirk spends $20 each week on muffins (price = $2) and bagels (price = $1). This week he bought four muffins and ______bagels. The marginal utility of muffins is 30 utils and the marginal utility...

1. Arrow up or down: When a gasoline tax is offset by an income-tax cut that makes a consumer s original choice just affordable, gasoline consumption will _____because the tax _____the bang per buck...

Using the summary values that follow, conduct a one-tailed, independent samples t test with a = .05: M 1 = 22, n 1 = 8, M 2 = 25, n 2 = 9, s(m1-m2)=2.11 Assume that the researcher expects scores in...

Answer. Estimate the linear model and use an analysis-of-variance approach to test the hypothesis that 1 = 0 against the alternative hypothesis B1 is not equals to 0. What is the value of the...

Sheridan reported the following information for its fiscal year end: On net sales of $46.400 billion, the company earned net income after taxes of $6.264 billion. It had cost of goods sold of $18.792...