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just b, c and d please.
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- Read Kiyotaki (1998). Consider the model in section 2 of the paper. Suppose there is no borrowing constraint (i.e., assume 0 is arbitrarily large). Also assume that a = 1.2, ß = 0.9, y = 1.05, d = 0.1, and n = 4. (The notations of variables and parameters follow Kiyotaki (1998). Just in case, & denotes the lower case of Delta in the Greek alphabet.) Reference: Kivotaki, N. (1998). "Credit and Business Cycles." The Japanese Economic Review, volume 49, issue 1, pages 18-35. 1. What is the equilibrium value of the net interest rate in the steady state? (For example, if your answer is 5% in percentage points, then enter 0.05.) 2. Compute the ratio of aggregate borrowing (Bt+1 /rt) to aggregate output (Yt + Y't) in the steady state. (You can assume that this ratio is constant in each period in the steady state.) Notes: Make sure to clarify the notations of variables and parameters in your proof clearly if they are different from those defined in Kiyotaki (1998).Read Kiyotaki (1998). Consider the model in section 2 of the paper. Suppose there is no borrowing constraint (i.e., assume is arbitrarily large). Also assume that a = 1.2, B=0.9, y = 1.05, 8 = 0.1, and n = 4. (The notations of variables and parameters follow Kiyotaki (1998). Just in case, & denotes the lower case of Delta in the Greek alphabet.) Reference: Kiyotaki, N. (1998). "Credit and Business Cycles." The Japanese Economic Review, volume 49, issue 1, (You can obtain a free electronic copy of this article through the university library's website. If you do not know how, please ask the librarians.) Answer the following questions. pages 18-35.Read Kiyotaki (1998). Consider the model in section 2 of the paper. Suppose there is no borrowing constraint (i.e., assume is arbitrarily large). Also assume that a = 1.2, 3=0.9, y = 1.05, 8 = 0.1, and n = 4. (The notations of variables and parameters follow Kiyotaki (1998). Just in case, & denotes the lower case of Delta in the Greek alphabet.) Reference: Kiyotaki, N. (1998). "Credit and Business Cycles." The Japanese Economic Review, volume 49, issue 1, pages 18-35. (You can obtain a free electronic copy of this article through the university library's website. If you do not know how, please ask the librarians.) Answer the following questions. 1. What is the equilibrium value of the net interest rate in the steady state? Enter your answer in the blank box below. (For example, if your answer is 5% in percentage points, then enter 0.05 in the blank box below.) 2. Compute the ratio of aggregate borrowing (Bt+1/rt) to aggregate output (Yt + Y') in the steady state. (You can assume that…
- IS/LM Model refers to the general equilibrium not macroeconomic equilibrium.Consider the following short-run, closed economy model of the economy. Goods Market C = 50 + 0.5(Y – T) I = 150 – 10r ; NX = -200 G = 150 ; T = 100 Money Market M = 20,000 P = 100 L(Y, r) = Y – 50r 1. Find the equilibrium values of r and y. *** This has been answered*** Goods Market = 600 - 20r Money Market = 200 + 50r equilibrium value of r = 5.71; Y = 485.8 Policymakers plan to balance the budget by decreasing G. What is the size of the Keynesian-Cross government spending multiplier and the horizontal shift of the IS curve? What are the resulting IS-LM equilibrium values of r and Y after the shift? What is the size of the effective (actual) government spending multiplier? Why is it smaller?Consider the following short-run, closed economy model of the economy. Goods Market C = 50 + 0.5(Y – T) I = 150 – 10r ; NX = -200 G = 150 ; T = 100 Money Market M = 20,000 P = 100 L(Y, r) = Y – 50r 1. Find the equilibrium values of r and y. *** This has been answered*** Goods Market = 600 - 20r Money Market = 200 + 50r equilibrium value of r = 5.71; Y = 485.8 2. Assume the natural rate of output is Y̅ = 210, individuals do not hold currency (cr = 0), and the reserve requirement is 10% (rr = 0.1). If the Fed desires to return the economy to its natural level, what should they do with reserves (R) and the money supply (M)? What is the new equilibrium real interest rate?
- Consider the following short-run, closed economy model of the economy. Goods Market C = 50 + 0.5(Y – T) I = 150 – 10r ; NX = -200 G = 150 ; T = 100 Money Market M = 20,000 P = 100 L(Y, r) = Y – 50r 1. Find the equilibrium values of r and y. *** This has been answered*** Goods Market = 600 - 20r Money Market = 200 + 50r equilibrium value of r = 5.71; Y = 485.8 2. At the equilibrium in part 1, what is the value of national savings (S = Y – C – G)? Investment? Show the results using a graph for the market of loanable funds. Is that market in equilibrium? Explain.(A Two-Period Sticky-Price Model). Consider a two-period, sticky-price economy like the one studied in lectures 11-13. Suppose that the household’s intertemporal optimality condition is of the form C2 C1 = β P1 P2 (1 + i), where C1 and C2 denote consumption in periods 1 and 2, P1 = P2 = 1 denote the price levels in periods 1 and 2, β = 0.9 denotes the subjective discount factor, and i denotes the nominal interest rate, which must satisfy the zero lower bound (ZLB). Suppose further that the full employment levels of output in periods 1 and 2 are given by Y¯ 1 = Y¯ 2 = 1, and that the economy is always at full employment in period 2 (the long run). Part 1: Suppose the central bank sets the nominal interest rate at the level i ∗ that minimizes unemployment without overheating. Calculate i ∗ . Part 2: Suppose that due to bad expected meteorological conditions, the full-employment level of output in period 2 is revised down to 0.8. Suppose that in response to this news, in period 1 the…Consider the following macroeconomic model: Y = C + Io + Go C = a + b(Y-T) T = d+tY Where the endogenous variables are Y, C and T, while the exogenous variables are G₁ and I. The parameters are such that a > 0,d>0,0Similar to how the quantity demanded for a good depends on its price, the quantity of money demanded depends on the cost of holding money, or the nominal interest rate (i). In addition to this, the demand for real money balances is also a function of income (Y). Using all of this information, suppose the demand for real money balances takes on the following functional form: (M/P)dd=500 + 2Y – 9i The Fisher equation relates the nominal interest rate to the real interest rate (r) and the expected rate of inflation (Eπ) when examining ex-ante (based on forecasts or 'before the event') effects. The equation ( (M/P)dd = 500 + 2Y – 9(Eπ – r)/(M/P)dd = 500 + 2Y – 9(r – Eπ) / (M/P)dd = 500 + 2Y + 9(r + Eπ) / (M/P)dd = 500 + 2Y – 9(r + Eπ) ) is equivalent to the function given for the demand for real money balances. Suppose the central bank announces that it will increase the money supply in the future, but it does not change the money supply today. Complete the following…In this problem you will work with the IS-MP model to calculate a macroeconomic equilibrium using algebra. The steps are: 1) find the IS equation 2) find the MP equation 3) combine them by substituting the r value from the MP equation into the IS equation Assume C = 1 + 0.75Y - 0.5T - 25r, I = 19 - 75r, G = 12, T = 14, the average FFR = 0.05, expected inflation is 3%, the risk premium is 4%, and potential output is 80. What is the output gap in the macroeconomic equilibrium?a) What are some of the main assumptions behind the H-O (Heckscher-Ohlin) model. b) What is/are the assumption(s) of the H-O model in regards to demand? How does (do) this (these) deviate from the Classical School assumptions? c) Examine the Stolper-Samuelson Theorem in conjunction with the H-O model and the factors of production.SEE MORE QUESTIONS