Consider the following model of the IS curve without an international sector (i.e., imports = exports = 0). Final expenditures are characterized by the following three equations: Consumption: 𝐶 𝑡 𝑌 ¯ 𝑡 = 𝑎 ¯ 𝑐 + 𝑏 ¯ 𝑐 ( 𝑅 𝑡 − 𝑟 ¯ ) Investment: 𝐼 𝑡 𝑌 ¯ 𝑡 = 𝑎 ¯ 𝑖 − 𝑏 ¯ 𝑖 ( 𝑅 𝑡 − 𝑟 ¯ ) Government expenditure: 𝐺 𝑡 = 𝑎 ¯ 𝑔 𝑌 ¯ 𝑡 Assume that ∞ > 𝑏 ¯ 𝑖 > 𝑏 ¯ 𝑐 > 0 . In contrast to the assumptions we made in class, consumption in this version of the model responds to changes in the real interest rate. Based on this information, the IS curve is:单项选择题

A

horizontal.

B

vertical.

C

less steeply sloped than the “standard” IS curve with 𝑏 ¯ 𝑐 = 0 .

D

more steeply sloped than the “standard” IS curve with 𝑏 ¯ 𝑐 = 0 .

E

Not enough information is given.

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类似问题

Consider the IS curve 𝑌 ~ 𝑡 = 𝑎 ¯ − 𝑏 ¯ ( 𝑅 𝑡 − 𝑟 ¯ ) + 𝑥 ¯ 𝑌 ~ 𝑡 , where 𝑏 ¯ = 1 , 𝑥 ¯ = 1 / 4 , and 𝑅 𝑡 − 𝑟 ¯ = 0.03 . If there is a positive demand shock where the economy goes from 𝑎 ¯ = 0 to 𝑎 ¯ = 0.05 , then short-run output changes by ______ percentage points (enter a negative number for a fall in short-run output and a positive number for a rise in short-run output). Round your answer to the nearest tenth of a percent.

Using the IS curve 𝑌 ~ 𝑡 = 𝑎 ¯ − 𝑏 ¯ ( 𝑅 𝑡 − 𝑟 ¯ ) , in the long run,  𝑎 ¯ [ Select ] equals 0 equals 1 and 𝑅 𝑡 [ Select ] > < = 𝑟 ¯ , so that [ Select ] the economy's actual output equals potential output. the economy is in a boom the economy is in a recession .

Consider an economy with the following IS curve: 𝐼 𝑆 : 𝑌 ~ 𝑡 = 𝑎 ¯ − 𝑏 ¯ ( 𝑅 𝑡 − 𝑟 ¯ )   Suppose we assume 𝑎 ¯ = 0.03 , 𝑏 ¯ = 1 , 𝑅 𝑡 = 𝑟 ¯ = 0.045 . Let Δ 𝑌 ~ 𝑡 = 𝑌 ~ 𝑡 − 𝑌 ~ 𝑡 ′ , where 𝑌 ~ 𝑡 is short-run output when the real interest rate equals 𝑅 𝑡 and 𝑌 ~ 𝑡 ′ is short-run output when the real interest rate equals 𝑅 𝑡 ′ . If the real interest rate falls from 𝑅 𝑡 to 𝑅 𝑡 ′ = 0.02 , then Δ 𝑌 ~ 𝑡 = ______ percent. Round your answer to the nearest tenth of a percent.

Consider the IS curve 𝑌 ~ 𝑡 = 𝑎 ¯ − 𝑏 ¯ ( 𝑅 𝑡 − 𝑟 ¯ ) + 𝑥 ¯ 𝑌 ~ 𝑡 , where 𝑏 ¯ = 1 , 𝑥 ¯ = 1 / 4 , and 𝑅 𝑡 − 𝑟 ¯ = 0 . If there is no demand shock, i.e. 𝑎 ¯ = 0 , and the real interest rate increases by 1 percentage points, then short-run output changes by ______ percentage points (enter a negative number for a fall in short-run output and a positive number for a rise in short-run output). Round your answer to the nearest tenth of a percent.

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