Draw an IS-LM model in general equilibrium. Show the effect of expansionary monetary policy, and then explain what adjustment will happenin a Keynesian version of the model. Did this policy accomplish anythingwith regards to GDP growth? Explain the trade-off for this policy in theKeynesian version.
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Draw an IS-LM model in general equilibrium. Show the effect of expansionary
in a Keynesian version of the model. Did this policy accomplish anything
with regards to
Keynesian version.
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- Now, Assume that Peruvian government responds by using monetary policy to stabilize output after a shock. For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock and the policy response.For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, TB. a. Peru's main trading partner, China, enters into a recession. China's output decreases. b. Investors expect a depreciation of the Sol, the Peruvian currency. c. The money supply in Peru increases. d. Peruvian government increases government spending. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Now, Assume that Peruvian government responds by using monetary policy to stabilize output after a shock. For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock and the policy response.For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, TB. a. Peru's main trading partner, China, enters into a recession. China's output decreases. b. Investors expect a depreciation of the Sol, the Peruvian currency. c. The money supply in Peru increases. d. Peruvian government increases government spending. answer only D part Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock and the policy response. For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, and TB. Assume floating exchange rate and the government uses monetary policy to help stabilize output. a. Foreign output increases. b. Investors expect an appreciation of the home currency in the future. c. The home money supply decreases. d. Domestic tax decreases. 2. Now repeat your analysis in #1 above but this time assume the central bank responds to the shock in order to maintain a fixed exchange rate.
- The economy of Rabbit is operating according to the following IS-LM-PC model: IS equation: Y - CIY - T) + (Y,r+ x) + G LM equation: r7 PC equation: a(-1) (a/L) (Y - Y) where at-1) is the inflation from the previous period and Y, is the potential output. Suppose that the economy is at its potential output. Then, the government raises taxes to close the budget deficit. What would happen to this economy in both short- and medium run? O IS curve shifts left. Output falls below potential output and inflation rate rises above the last year's inflation. The Fed can cut the interest rate to move the economy back to the potential output in the medium run. Then, inflation would be decelerating IS curve shifts left. Output falls below potential output and inflation rate falls below the last year's inflation. The Fed can raise the interest rate to move the economy back to the patential output in the medium run. Then, Inflation would be stable. O IS curve shifts left. Output falls below potential…For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock. For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, and TB. Assume the government allows the exchange rate to float and makes no policy response. a. Foreign output decreases. b. Investors expect a depreciation of the home currency. c. The money supply increases. d. Government spending increases Please illustruate the IS-LM model and explain in detail. I want to understandExplain and show graphically how monetary and fiscal policies can be used in a closed economy IS-LM economy that is in a recession.
- When there is no persistence in the productivity shock process, the production economy model with investment can generate a counter - cyclical current account movement. true or false? explain.Suppose the Federal Reserve enacts contractionary monetary policy to offset covid-era quantitative easing and avoid long-run inflationary pressure. Use our simultaneous equilibrium model to show the effects of such a policy action on US interest rates as well as the value of the dollar relative to the Japanese Yen.According to the Keynesian model, which answer might cause a recession but wouldn't cause inflation for Country X. O a decrease in interest rates O a decrease in a major trading partners export prices a major trading partner's economic slowdown O an increase in domestic investment
- 1. What are so-called heterodox adjustment programs? Are they a sound long-term approach? 2. Use the IS/LM/BP graph to illustrate the effects of a revaluation. Show the fiscal and monetary policy changes that would make it more likely that a revaluation will succeed in eliminating a payments surplus.For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock. For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, and TB. Assume the government allows the exchange rate to float and makes no policy response. d. Government spending increases For each of the following situations, use the IS-LM-FX model to illustrate the effects of the shock and the policy response. Note: Assume the government responds by using monetary policy to stabilize output and assume the exchange rate is floating. For each case, state the effect of the shock on the following variables (increase, decrease, no change, or ambiguous): Y, i, E, C, I, and TB. d. Government spending increases. Please illustruate the IS-LM model and explain in detail. I want to understand for the upcomming test. Thank you in advanced.2. Based on the IS-LM-PC model for a closed economy studied in class, which of the following statements is correct? a) In the medium run monetary policy can only be used to control inflation, but it will not affect production. b) In the medium run, fiscal policy can only help to increase or decrease interest rates, but it will not affect production. c) Both monetary and fiscal policy can't be effectively uscd to increase production in the short run. d) All of the above.