Please solve Problem 5~8 Only answers QUESTION 5 2 pointsSave Answer Suppose tha

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Please solve Problem 5~8

Only answers

QUESTION 5 2 pointsSave Answer Suppose that the behavior of households and firms in an economy is determined by the following equations C-25+0.9Yd, 11-60, G = 80, T-60, TRs 10 a. Calculate an expression for aggregate demand as a function of income (please enter your answer in the form: AD-abY) b. Calculate the equilibrium level of output (please just enter the numeric value of output). Y c. Now assume that the govemment decides to simultaneously increase government spending and taxes by 50 (G-130 and T-110). Calculate the new expression for aggregate demand. d. Calculate the new equilibrium level of output. Y- QUESTION 6 1 points Save Answer Fiscal policy refers to the use of tools controlled by the government, such as banking regulations and the issuance of currency, to affect the levels of the money supply, interest and credit rue False QUESTION 7 2 pointsSave Answer Please identify whether the following descriptions are associated with inflation, deflation, or both inflation and deflation It hurts people on fixed incomes It helps people on fixed incomes A. Deflation B. Inflation C. Both inflation and deflation D. Deflation E. Inflation F. Deflation G. Both inflation and deflation It increases uncertainty It leads people to cut back on spending It creates menu costs, because firms have to spend resources updating their prices - - It wipes out savings It makes savings more valuable

Explanation / Answer

Ans)
5.
a.
AD=25+0.9Yd+60+80
=165+0.9(Y-60)
=165+0.9Y-54
=111+0.9Y
b.
AD=Y
Y=111+0.9Y
0.1Y=111
Y=1110
c.
AD=25+0.9Yd+60+130
AD=215+0.9(Y-110)
AD=215+0.9Y-99
AD=116+0.9Y
d.
Y=116+0.9Y
0.1Y=116
Y=1160

6.
FALSE

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