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the ad curve is the aggregate demandthe ad curve is the aggregate demand as a function of p whenthe goods and money market are both in
the is-curve in the as-ad model the is-curve is not affected by p in the as-ad modelwe can define an is-curve in the as-ad model similarly to the
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