Question: Answer the question using the formula below Consumption function: C=10 + 0.7 Y Investment function: I=50-r Government Expenditure: G = 8 Money supply:

Answer the question using the formula below
• Consumption function: C=10 + 0.7 Y
•Investment function: I=50-r
• Government Expenditure: G = 8
•Money supply: Ms = 10
• Monetary demand: Md=20+0.2Y-r

•price level:P=1
(1) Derive an expression of the LS curve and the LM curve
(2) If the marginal propensity to consume increases to 0.8, plot the change in the LS curve
(3) Find the value of Keynesian income-expenditure multiplier and the value of LS-LM multiplier. Which multiplier has a greater value? Explain why
(4) If government purchases increase by 3, how much does income (Y) each decrease in the construction effect?

Step by Step Solution

★★★★★

3.40 Rating (144 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

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

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Question 5 (13pt) SuperMed has been running a R&D project on a disease and finally found the medicine for the disease. To conduct the R&D, it borrowed money from a bank in the form of corporate debt....

A firm has debt due next year and the amount is 100. It has cash of 10. It has only 1 project to invest. If the project succeeds, it will generate 1000 cash flow next year and 0, otherwise....

A corporation borrowed money from a bank after the president negotiated the loan and signed the promissory note. On the first blank signature line of the note, the president wrote the name of the...

Use the graph to answer the question that follows. Based on the accompanying graph, assuming that the velocity of money is constant, between year 1 and year 2, which of the following statements must...

The sales are $10 million this and expected to grow at 5% in real terms for the next three years. The appropriate nominal discount rate is 10%. The inflation is expected to be 2% per year during the...

Assignment 01 (semester 2) Assignment 01 Unique number 730716 Closing date 30 August 2021 Content Learning units 1 and 2 of the Study Guide and the relevant chapters of the prescribed book Questions...

CONCORDIA UNIVERSITY Department of Economics ECON 203 SAMPLE MIDTERM EXAMINATION WITH ANSWERS Multiple Choice Questions (2 marks each). 1.Gross domestic product (GDP) equals the ______ of final...

now//You are asked to price some options on KYC stock. KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent,...

KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...

Question 1(Multiple Choice Worth 1 points) (02.06 MC) Suppose Country 'X' is producing an output of 300 units of a certain good at $3 per unit in 2017. With time, the price level rises from $3 per...

Who owns the policy expirations or the renewal rights to the business under the independent agency system?

Let f(x) = 5x The slope of the tangent line to the graph of f(x) at the point (2, 1) is The equation of the tangent line to the graph of f(x) at (-2, 1) is y= mx + b for m= and b = Hint: the slope is...

Scenario Your city routinely handles a large event that requires support from state and federal organizations. An audit of the emergency network management of the event has disclosed gaps in the ways...

The capital balance for Maxwell is $110,000 and for Russell is $40,000. These two partners share profits and losses 70 percent (Maxwell) and 30 percent (Russell). Evan invests $50,000 in cash into...

Bryant Company has a factory machine with a book value of $90,000 and a remaining useful life of 5 years. It can be sold for $30,000. A new machine is available at a cost of $400,000. This machine...

Smithson Mining operates a silver mine in Nevada. Acquisition, exploration, and development costs totaled $5.6 million. After the silver is extracted in approximately five years, Smithson is...

Woodwick Company issues 10%, five- year bonds, on December 31, 2012, with a par value of $200,000 and semiannual interest payments. Use the following bond amortization table and prepare journal...

The Templeton Manufacturing and Distribution Company of Tacoma, Washington are contemplating the purchase of a new conveyor belt system for one of its regional distribution facilities. Both...

Question 22.5pts The best assessment programs share timely information with stakeholders in a variety of ways, including all of the following except Group of answer choices Storage of assessment...

homework help, how to solve the question of this excel ACCT 3350 - Winter 2016 Assignment #1 Due Date: Friday, Feb 5 by 11:30pm (This completed Excel file uploaded in Blackboard) Instructions: This...

AP Statistics Final Project AP Statistics has introduced you to the methods and procedures that allow us to explore four themes: Producing Data, Exploring Data, Anticipating Patterns, and Statistical...

f |nbo> Mark m Math 9 cross 1) Pears Afur 5 UNC' Inventory Control Jesaki Publishing sells 50,000 copies of a certain book each year' It costs the company $1 to store a book for one year Each time...

Background You are a manager in the audit division at Miller Yates Howarth (MYH), an accounting firm with offices throughout the major regional centres of NSW and Queensland. Although a medium sized...

help mi.. h2 Question: Payday Lending 1a) A firm's estimated long-run total cost function is LRTC = 160Q - .6Q2 + .002Q3. Suppose the firm is producing 100 units of output. The cost elasticity is __...