ECON 311 Chapter Notes - Chapter 23: Einhard

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27 Feb 2019

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23 output 4 prices in the short run. Einhard bc apricelevelinfluencesdesiredaggregateexpenditures desirednetexports changesinconsumption whatevermoneycanbuydependsonpricelevel muchofprivatesector"stotalwealthis heldinformofassetswfixednominalvaluelegmoney. Apricelevel damountofgoods4servicesmoneycanpurchase drealvalueofmoneyheld byprivatesector dpricelevel arealvalueofmoneyheldbyprivatesector govdacorporatebondsare alsoassetsw fixednominalvalue bondholderlendsmoneytotheissuerofthebond9receivespaymentwhenissuerof whenthebondmatures. Apricelevel repaymenttobondholderislowerinrealvalue declineinwealthfor incinwealthforissuerofbondbctheyrepayedat alowerrealvalue bondholder in dollarterms thebondholder"sreductioninwealthis exactlyoffsetbytheissuers inc in wealth nochangeinaggregatewealth. Apricelevel d realvalueofprivatesector"swealth dautonomousdesiredconsumption downward shiftofaefunction chan texdb. Whenpricelevelisatpo aecurveis aeo andeqgdpisyo inc inpriceleveltop causesaecurvetoshiftdowntoaeiandeggdpisy plotyoagainstpotoyieldtopointontheadcurve plotnewlevelofgdpagainstp toyielde onadcurve repeatforpricelevelpzdaeggdpyztoyielderontheadcurve a changeinpricelevelcausesashiftontheaecurvebutmovement alongtheadcurve. I microdemandcurve situationwhenpriceofoneproduct changeswhilepricesofourotherproducts4 consumer"sdollarincomesareconstant fortheadcurve thedollarvalueofnationalincome is notconstantaspricelevelchanges4we movealongtheadcurve. Aggregatedemandshockanyeventthatcauses ashiftintheadcurve foragivenpricelevel inautonomousaggregateexpenditure aecurveshiftsup adcurveshiftsright fora givenpricelevel inautonomousaggregate expenditure aecurveshiftsdown adcurveshiftsleft in ordertoshifttheadcurve s in autonomous expendituremustbecausedbysomethingotherthan. Sin domesticpricelevel simplemultiplierdatheadcurvei simplemultipliermeasuresthehorizontalshiftintheadcurvein responseto a changeinautonomous desiredexpenditure it pricelevelis constant4 outputisdemanddetermined simplemwill alsoshowthechangein er incomethatoccursinresponseto achangeinautonomous expenditure. Ascurveispositivelyslopedbcfirmswillprovidemoreaggregateoutputonly at ahigherpricelevel1tocoveraunitcosts pricetakingfirmssellhomogenousproducts marketpricesbeyond theirinfluence pricesettingfirmsselldifferentiated products9havesomeability todeterminethepricetheycharge actionsotbothcausepricelevel supplyofoutputtobepositivelycorrelated positiveslopeascurve. Keynesianrangehorizontalportionoftheascurve whenoutputispushedabovenormalcapacityunitcostsrisevrapidlydamanyhighercostproductionmethods mayhavetobeadopted oroutput arunitcosts rnriseinpricenecessarytoinducefirmstoinc output shiftsintheascurve foranygrimlevelofoutput anythingthatchangesfirm"sproductioncostscausesascurvetoshift. Tfactorprices firmsfindcurrentproductionlessprofitable apricelevel ascurveshifts lett4up daggregatesupply itpricesdonotincthenfirmswininproduction doutput eachpricelevelforeconomy asawholecomparedtobeforefactorprias a ascurveshiftsup4left improvementintech d mitcostsforgivenlevelofoutput dprices ascurveshiftsdown4 right aaggregatesupply changesintechnology.

Related Questions

Consider an economy with a money demand curve given by Dm = 10,000 - 4000r.

a) If the money supply in the economy is 6,000, then what is the equilibrium interest rate and quantity of money?

b) If (gross) investment demand is given by ID = 20,000 - 200r, then what is the equilibrium level on investment?

c) In a private closed economy, where AE = C + Ig and C = 10,000 + 0.8 Y, what is the equilibrium level of real GDP in the immediate short run?

d) In the immediate short run, how much does real GDP change when the Bank of Canada increases the money supply from 6,000 to 7,000? Is this monetary policy contractionary or expansionary?

amethystbuffalo874

Changes in the quantity of money lead to real changes in the economy. If this is the case, why would the central bank ever stop increasing the money supply?

a. Increasing the money supply is not a politically popular action and may lead to leaders of the central bank not getting reelected

b. The government has rules in place on the maximum amount the money supply can be increased in a given fiscal year

c. Although there is a short-run incentive to increase the money supply, these effects wear off in the long run as prices adjust and then drive down the value of money.

d. The short-run benefits are outweighed by the short-run costs of increases in the money supply

e. Although there is a short-run incentive to increase the money supply, these effects wear off in the long run as prices adjust and then drive up the value of money

coralreindeer872

An economy with zero net exports is described below:

C	= 100 + 0.6 (Y 'T)
I ^p	= 70
G	= 120
NX	= 0
T	= 150
The multiplier in this economy is 2.5.

A. Find short-run equilibrium output.

Instruction: Enter your response as an integer value.

Short-run equilibrium output: .

B. Economic recovery abroad increases the demand for the country's exports; as a result, NX rises to 80.

Instruction: Enter your response as an integer value.

Short-run equilibrium output (Click to select)decreases/ increases to ________ .

C. Assume that foreign economies are slowing, reducing the demand for the country's exports so that NX = -80. (A negative value of net exports means that exports are less than imports.)

Instruction: Enter your response as an integer value.

Short-run equilibrium output (Click to select)increases/decreases to ___________ .

D. Which of the following best describes the tendency of recessions and expansions to spread across countries?

1. Lower planned aggregate spending in one nation will reduce the amount of goods it exports abroad, thereby lowering the value of imports for its trading partners, which will reduce its short-term equilibrium output as well.

2. Lower planned aggregate spending abroad means that fewer goods will be exported from a specific nation, leaving more goods available for domestic consumption (C) in that nation, which will increase its short-term equilibrium output.

3. Lower planned aggregate spending abroad will reduce the amount of investment that flows into domestic industries from other countries, thereby reducing domestic short-term equilibrium output.

4. Lower planned aggregate spending in a nation means fewer imports of foreign goods, thereby reducing the short-term equilibrium output of its trading partners through lower net export (NX) values in those nations.

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ECON 311 Chapter Notes - Chapter 23: Einhard

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