Assume That in a Certain Economy the LM Curve Is

question 52

Essay

Assume that in a certain economy the LM curve is given by Y = 2,000r - 2,000 + 2(M/P)+ u,where u is a shock that is equal to +200 half the time and -200 half the time,and the IS curve is given by Y = 8,000 - 2,000r.The price level (P)is fixed at 1.0.The natural rate 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? Under rule i,what will Y be when u = -200?
b.Under rule ii,what will Y be when u = +200? Under rule ii,what will Y be when u = -200?
c.Which rule will keep output closer to 4,000?

Apply theories of cognitive development to practical interventions in educational and counseling settings.

Identify normal motor and visual developmental milestones in early childhood.

Understand the challenges in changing children's beliefs and the role of assimilation and accommodation.

Recognize the significance of culture and mediated learning in acquiring language and cognitive development.

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Definitions:

Liquid Investments

Liquid investments are assets that can be quickly and easily converted into cash without significant loss of value.

Aggressive Collection

A technique used by businesses to rapidly pursue the collection of outstanding receivables to improve cash flow and reduce delinquencies.

ACP (Average Collection Period)

The average number of days it takes for a business to receive payments owed by its clients, reflecting the effectiveness of a company's credit and collection policies.

Credit Terms

The conditions, including payment deadlines and interest rates, that a seller extends to a buyer.