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q demand for money for as-ad modelthe money market the demand for money depends negatively on rpositively on y and positively on p in as-ad
q describe exports and imports in as-ad modelexports and imports this is more difficult to justify owing to exchange rate suppose that we have a
q investment demand of the as-ad modelinvestment demand as long as we keep nominal interest rate and thus real interest rates constant there is no
q consumption function in the as-ad modelconsumption suppose that p increases by say 10 whereas real gdp y is constant nominal gdp and nominal
q money market in the as-ad modelgoods and the money market in the as-ad modelwe begin by studying goods market and money market when prices are no
q explain as-ad model and inflationeven though as-ad permits changes in the price level it doesnt allow for persistent inflation or deflation we cant
q assumptions of the as-ad modelthe most significant change we make going from is-lm model to as-ad model is to allow p to be endogenous as p was
q explain function of as-ad modelthe function of as-ad model is to extend is-lm model so that we can analyze situations where y gt yopt to achieve
equilibrium in the money market in the is-lm-model we have equilibrium in the money market whenmdy r ms this is the equation from money
q what do you mean by supply of moneysupply of moneythe supply of money is an exogenous variable in the is-lm modelmoney supply is entirely under
q demand for money and gdpthe demand for money also relies on the gdp as gdp is closely associated to national income if you choose to hold a fixed
q show the advantage and disadvantage of moneymoney has one significant advantage and one disadvantage compared to bonds middot advantage money is
q what is demand for moneydemand for moneythe demand for money depends negatively on r and positively on the yin the is-lm modelas for any type
q aggregate demand in the is-lm modelaggregate demandaggregate demand depends on y and r in the is-lm modelas investments depend on r and
q consumption function in the is-lm modelthe consumption function will be the same as in cross model consumption will depend positively on y in the
q show the investment function in the is-lm modelthe investment function in the is-lm model investment was an exogenous variable in cross model owing
q explain about is-lm-modelthe key difference between the is-lm model and the cross model is that nominal interest rate is exogenous in cross model
a vital question is whether the equilibrium we have identified in labor market with a high unemployment rate can remain in long run will there not be
q explain reversed says lawin the cross model supply should instead follow demand cross model not only rejects says law it turns it entirely upside
q illustrate the says lawwith says law aggregate demand would always be equal to aggregate supply and cross model would be incorrect keyness
q why gdp is determined only by aggregate demandnote that we havent said anything about the aggregate supply so far in order to justify why gdp is
q is household savings depend on gdp in the cross modelhousehold savings depends on y since sh y - c - nt and c and nt both rely on y how it depends
the government in the cross modelnet taxes nty depends positively on real gdp in the cross modelin this model when national income increases amount
the rest of the world in the cross modelimports imy depends positively on y in the cross modelin the classical model imports doesnt depend on y the
q describe the keynes motivationkeynes motivation in good times when y is high above its trend national income is high above it trend consumers will