Macroeconomics Questions
Explore questions in the Macroeconomics category that you can ask Spark.E!
With a decrease in the real money supply M/P, the LM curves shifts upwards.
The fact that if the the money market is in equilibrium, the bonds market will be too, is know as the Walra's Law.
The IS curve is always downward sloping.
An increase in the money supply decreases the equilibrium interest rate on the money market for any given level of income
A central bank with interest rate control automatically adjusts the money supply such that the interest rate doesn't change.
The effect of an increase in the interest rate on the money demand determines the slope of the LM curve.
If money demand decreases strongly with high interest rates, the LM curve is rather flat.
A point lying above the LM curve represents excessive supply in the money market
A point lying under the IS curve represents excessive demand in the goods market.
GDP by production = value of produced output - value of used input.
If assets prices increase, the return of those latter decreases.
The substitution effect refers to the allocation of different consumption in different years.
According to the Haavelmo Theorem, if we increase both G and I by one unit, output will increase by one unit too.
Q; A positive output gap implies an unemployment rate:- above the natural rate of unemployment.- below the natural rate of unemployment.
By conducting an expansionary monetary policy, the central bank makes the prices of bonds increase.
Q; 2. In the following examples, would the classical model of the price level bea useful model for analyzing how the economy behaves?a. The economy has high unemployment and no history of inflation.b. The economy has just experienced five years of hyperinflation.c. Although the economy experienced inflation in the 10% to 20% rangethree years ago, prices have recently been stable and theunemployment rate has approximated the natural rate ofunemployment.
The interest rate on the money market is known as the price of money.
The position of the IS curve is determined by the exogenous parameters C0, C1, G, and T.
GDP by income = Labor income + Capital income.
The CPI is a Laspeyres price index.