Question: Please help me solve this, thank you :) Question 8 (10 marks) If bonds demand (Bd) is P = 1100-5Q, bonds supply (Bs) is P

 Please help me solve this, thank you :) Question 8 (10
Please help me solve this, thank you :)

Question 8 (10 marks) If bonds demand (Bd) is P = 1100-5Q, bonds supply (Bs) is P = 500+15Q, respective interest rate i* = (F-P)/P, assume F = 1000, money demand is L = 0.8Y-62.5i and real money balance is $1500m with fixed prices. Each sub-question carries 2% marks. (a) Determine the interest rate using bonds market equations. (b) Show financial market dynamics in (BsBd), (MsMd) and (ISLM) spaces. (c) If IS was Y= 2240-120r, derive the AD function if MP rule was r = 2 +0.57 (d) Use ADAS to determine RGDP if Phillips Curve was t = 10 + 0.5(Y-Y*) + p. where Y* (Potential RGDP) was 1500 and p (financial friction) was 2%. Question 8 (10 marks) If bonds demand (Bd) is P = 1100-5Q, bonds supply (Bs) is P = 500+15Q, respective interest rate i* = (F-P)/P, assume F = 1000, money demand is L = 0.8Y-62.5i and real money balance is $1500m with fixed prices. Each sub-question carries 2% marks. (a) Determine the interest rate using bonds market equations. (b) Show financial market dynamics in (BsBd), (MsMd) and (ISLM) spaces. (c) If IS was Y= 2240-120r, derive the AD function if MP rule was r = 2 +0.57 (d) Use ADAS to determine RGDP if Phillips Curve was t = 10 + 0.5(Y-Y*) + p. where Y* (Potential RGDP) was 1500 and p (financial friction) was 2%

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