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Homework answers / question archive / Econ 302 - Intermediate Macroeconomics Spring 2021 Recap Video Questions Circle Best Answer: 1
Econ 302 - Intermediate Macroeconomics Spring 2021 Recap Video Questions Circle Best Answer: 1. What market does the LM curve capture? Market for money Output Market Labor Market 2. What does MS/P stand for? Real money supply Real money demand 3. What is r+πe equal to? Nominal interest rate=i interest rate on money real interest rate 4. What does L(r+πe) stand for? Real money supply Real money demand 5. What market does the IS curve represent? Output market market for money Labor Market 6. CD+ID+G captures the: Demand for goods and services supply of goods and services 7. Y captures the: Demand for goods and services supply of goods and services 8. When the output market is in equilibrium the following is true: Y= CD+ID+G Y= CD+ID+S Y= CD+S ID=SD 9. What is true when IS, LM, and FE all intersect at same single point? Output is at full potential potential Output is above full potential Output is below full 10. Suppose IS-LM intersect at Y*. If the FE line does not intersect at the same point, what is true about Y*? Y* is the equilibrium output in the economy showing the current state of economic activity Y* is the full-potential 11. When the FE line is to the right of the intersection of IS&LM, then the economy is Below full-potential Above full potential 12. IS captures equilibrium. Hence, along the IS curve every single point shows where Y= CD+ID+G MS/P = L(r+πe) 13. LM captures equilibrium. Hence, along the LM curve every single point shows where Y= CD+ID+G MS/P = L(r+πe) 14. Circle all the factors that will cause LM curve to shift: MS T P pk G Confidence (about economy) πe tax on capital (τ) πe tax on capital (τ) 15. Circle all the factors that will cause IS curve to shift: MS T P pk G Confidence (about economy) 16. If a shock to the output market causes demand for goods and services to rise, then the IS curve shifts Inwards Outwards 17. If a shock to the market for money causes r to rise, then the LM curve shifts Inwards Outwards Chapter 9: Video Outline * Partial (covers most of chapter 9; few videos to be added next week). A. Introduction Video 1: covers general objective of the chapter; purpose and goal of the IS-LM model Video 2: outlines the set up of the IS-LM model, including assumptions of the model B. IS curve Video 3: discusses 1st approach to deriving the IS curve Video 4: discusses the 2nd approach to deriving the IS curve Video 5: outlines shifts in IS curve C. LM curve Video 6: derives the LM curve Video 7: outlines shifts in LM curve D. FE line Video 8: derives the FE line and outlines shifts in FE line (refers to ch.3 discussion) E. Equilibrium in the IS-LM model Video 9: defines equilibrium vs general equilibrium; shows both on diagram Video 10: uses IS-LM diagram to show an economy above full potential vs. below full potential (to be used later when discussing “using policy to restore output”) F. IS-LM model Analysis (SR only) Video 11: Analysis, Example 1: shows how the model is used to conduct analysis via an example – shows impact of rise in consumer confidence Video 12: Analysis, Example 2: shows impact of monetary policy using IS-LM model – shows impact of rise in money supply Video 13: Analysis, Example 3: shows impact of fiscal policy using IS-LM model – shows impact of rise in government expenditure G. Numerical Example: IS-LM model Video 14: numerically derive the IS curve, LM curve, and then solve for Y* and r*. Example posted on iLearn. Video 15: Not provided. H. Price Adjustment and the Self-Correcting Mechanism Video 16: Shows the impact of a change in Price on the IS-LM diagram, specifically discusses/illustrates rise in P Video 17: Discuss the self-correcting mechanism; both Y*>? and Y*
