Assume That in a Certain Economy the LM Curve Is

question 21

Essay

Assume that in a certain economy the LM curve is given by Y = 2,000r - 2,000 + 2(M/P), and the IS curve is given by Y
= 8,000 - 2,000r + u, where u is a shock that is equal to +200 half the time and -200 half the time. The price level (P) is fixed at 1.0. The natural level of output is 4,000. The government wants to keep output as close as possible to 4,000 and does not care about anything else. Consider the following two policy rules:
i. Set the money supply M equal to 1,000 and keep it there.
ii. Manipulate M from day to day to keep the interest rate constant at 2 percent.
a.Under rule i, what will Y be when u = +200? What will Y be under rule i when u = -200? b.Under rule ii, what will Y be when u = +200? What will Y be under rule i when u = -200? c.Which rule will keep output closer to 4,000?

Understand the basics of market structures and the conditions for perfect competition.

Comprehend the significance of market extent and product substitutability in competition.

Understand the foundational laws and acts that govern environmental protection and their implications.

Distinguish between secured and unsecured creditors and their priorities in bankruptcy proceedings.

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Definitions:

Retentive

Pertaining to a device or process that retains its state or data even after power is lost or reset.

Program Modification

The process of making changes or updates to software or a set of instructions to correct errors or enhance functionality.

Energized

Refers to equipment that is supplied with electrical power or is in a state of being electrically charged.

Sequencer

A device or software that arranges and triggers a series of events or operations in a particular order.