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Material Type: Notes; Class: Intermediate Macroeconomic Theory; Subject: ECONOMICS; University: University of Wisconsin - Madison; Term: Fall 2006;
Typology: Study notes
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Econ302-Lecture
Date 10.27.
(Prof. Yongseok Shin)
TA: Seung Gyu Sim
Suppose that due to an exogenous shock,the interest rate goes up. < EXERCISE > Suppose that the government increases its expenditure. Analyze the impact onIS curve. Movement Along vs Parallel Shift
∆G. Then, Y^ =^ MPC x ( Y – T ) + I + G < EXERCISE > Suppose^ that^ the
government^ spending
goes^ up^ by^
$10.^ The^ marginal
propensity^ of^ consumption^ is 0.5,^ r=0.02,^ I=300-10000r,^ and^ the^ initial
G=$100=T.(a) Y=? and Y+∆Y=? (b) Fiscal Policy Multiplier?(c) Sketch the IS curves
< EXERCISE > Suppose that the interest rate increases from 0.02 to 0.05. The marginalpropensity of consumption is 0.5, I=100-1000r, and G=$100=T.(a) Y=? and Y+∆Y=? (b) Investment Multiplier?(c) Sketch the IS curve
