Home / Questions / In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the
In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the IS curve shifts down and to the left, and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run, what should the Fed do? Use the LR curve to formulate your answer.
14) Describe how the real interest rate changes in a Keynesian model if a shock shifts the IS curve down and to the right and the Fed changes its policy to keep output unchanged.
15) In the Keynesian model, suppose the Fed sets a target for the real interest rate. If the IS curve shifts up and to the right, and the Fed wants to keep output unchanged in the short run and the price level unchanged in the long run, what should the Fed do? Use the LR curve to formulate your answer.
16) Suppose the Fed cares only about keeping the economy close to full-employment output. The Fed can target the real money supply (thus keeping the LM curve fixed) or it can target the real interest rate, changing the money supply and shifting the LM curve however is necessary to prevent a change in the real interest rate.
(a)Which is the best policy if the main shocks to the economy are shocks to the IS curve? Explain why. Illustrate with a diagram.
(b)Which is the best policy if the main shocks to the economy are shocks to real money demand? Explain why. Illustrate with a diagram.
17) Use the LR curve to show what happens to output, the real interest rate, and the price level in the short run and in the long run if the government provides a tax credit to people who buy a new home, which leads to an increase in new housing
Dec 08 2019 View more View Less
Staley Inc. reported the following data: Net income ........... $280,000 Depreciation expense....... 48,000 Loss on disposal of equipment... 19,520 Increase in accounts r...
Apr 14 2020All are physical pollutants except a) heat b) sound c) radiations d) soot
Jul 12 2021Lewis, Zapata, and Fowler share equally in net income and net losses. After the partnership sells all assets for cash, divides the losses on realization, and pays the lia...
Jul 15 2020This course is Engineering MaterialsShow transcribed image text 1. Explain Material Index with few meaningful sentences (10 points) 2. Figure showed a panel supported at ...
May 13 2020What is the difference between supplies and supplies expense?
May 14 2021Draw the Lewis Structures and condensed structural formulas for the four alcohols with the molecular formula . Classify each alcohol as primary, secondary, or tertiary.
Jul 22 2021Write complete sentences that use the words shown. Use first-person pronouns (I, we, you, he, she, it, they) and third-person pronouns (me, us, you, her, him, it, them) t...
Jun 16 2021Let a= 2i+j-2k and b = i+j. Let c be a vector such that |c-a| = 3, |(axb)xc| =3 and the angle between c and a x b be 30 degrees. Then a.c is equal to: >
Aug 08 2020Lancer, Inc., starts a subsidiary in a foreign country on January 1, 2014. The following account balances for the year ending December 31, 2015, are stated in kanquo (KQ)...
Jul 13 2021Yuri Co. operates a chain of gift shops. The company maintains a defined contribution pension plan for its employees. The plan requires quarterly installments to be paid ...
May 04 2021