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a. Calculate the equilibrium level of income for the open economy aggregate expenditure model. (Show all your steps carefully.)
b. If there is a decrease in the marginal propensity to consume from 0.75 to 0.65, calculate the new equilibrium level of income and the value of the multiplier. (Again, show all your steps carefully.)
Why might the Bank of Canada decide to raise the overnight loans rate in 2018?
The Bank Canada might decide to raise the overnight rate in 2018 if _______.
$27k? $27,190? $26,190, or $9,000?
b. Provide a short explanation (in words only) why this true. Be sure to reference the difference between production decisions in the short run and long run.
Given the following equations for a certain economy: Y = C + I + G + X (Income identity) C =100 +0.9Yd (Consumption function) I = 200 –500r (Investment function) X = 100 – 0.12Y –500r (Net export) G = 200 (Government purchases) T = 0.2 (Tax rate) L = Y-100r (Real money demand) M = 800 (Real money supply).
Derive equations for IS and LM curves . Determine the r and y pair at which the two markets are clearing iii) Compute the values of C, I, X and L