Chapter 11 Macroeconomic Equilibrium in The Short Run Paper – Macroeconomic Equilibrium in the Short Run- Output, Employment and InflationPlease answer cle

Chapter 11 Macroeconomic Equilibrium in The Short Run Paper – Macroeconomic Equilibrium in the Short Run- Output, Employment and InflationPlease answer clearly step by step extensive answers, so i can see what you have done 🙂 Chapter 11: Macroeconomic Equilibrium in the Short Run
Question1 In reality, tax revenues are not exogenous, but move positively with income (GDP).
Suppose that T = ̅ + tY, where t is an exogenous tax rate. Use this tax revenue function to derive
the government spending multiplier in the following simple model: C = c + c1(Y – T) I = ̅ G = ̅
NX = NX0 -mY
Question 2 Derive the IS curve for the economy in the above exercise, with I = ̅– 20i. Plot it in (Y,
i) space.
Chapter 13: Output, Employment and Inflation
Question 3 A Philips curve is represented by the following relationship: π = ̃ – 10(U – ̅) + s,
where s is a supply shock term, on average equal to zero. Draw the Phillips curve when ̅ = 7% and
underlying inflation ̅ = 3% and 6%. Okun’s Law is U – ̅ = -0.5 (Y – ̅)/ ̅. Draw the aggregate
supply schedule when ̅ = 10,000.
Question 4 Using the conditions of the above exercise, show the impact of supply shocks s = 5%,
and s = -2%. Separately show the effect of raising ̅ to 10,200. Why is it argued that improving the
performance of the supply side of the economy is good for both inflation and employment?

Purchase answer to see full
attachment