UMD ECON 202 Keynesian Microeconomic Principles Paper


Description

QUESTION 6

    1. In March, Congress passed a $1.9 trillion Covid assistance mandible that interjacent, floating other items, excitation checks and growths in empire spending to acceleration promote the vaccine rollout. In this topic, you’ll stir the expected property of this prudence in the IS-LM example.
      Use an IS-LM diagram to parade the property of this prudence on output and the attention rebuke. Label your symbol altogether (including all curves, axes, and equilibria), and explain what happens to output. (10 points)
    2. Now let’s reflect commentary monetary prudence: (15 points)
      1. Use an IS-LM diagram to parade the property of commentary monetary prudence on output and the attention rebuke. Label your symbol altogether, and explain what happens to output.
      2. Do the two prudence scenarios in Topic 1 (the Covid assistance mandible) and Topic 2 (expansionary monetary prudence) accept selfsame property on output and the components of collection claim? Why or why not?
      3. Why couldn’t the Federal Reserve use oral forms of commentary monetary prudence in March 2021 to acceleration inflame the distribution?
    1. One momentous singularity of the U.S. distribution balance late decades is a widespread comment in impropriation government. (15 points)
      1. What drudge traffic parameter does this growth in impropriation government influence and why?
      2. Show the consequence of this shift on existent compensation and the spontaneous rebuke of unemployment using the drudge traffic example. Make assured to dedicate your graph altogether.
      3. Based on your response to (b) what happens to existent compensation when the markup growths? Why?
      4. In the post-1970 U.S. distribution, this stir in impropriation government has charmed establish over-and-above a succession of institutional shifts such as a refuse in the preponderance of unions. What is the consequence of these concurrent shifts on existent compensation and the spontaneous rebuke of unemployment in the U.S. drudge traffic? Support your response graphically.

      QUESTION 3