Business, 25.04.2020 04:45 heberavilesramirez52

5. AD-AS Numerical Analysis (10 points). Assume that the long-run aggregate supply curve is vertical at Y = 3,000 while the short-run aggregate supply curve is horizontal at P = 1.0. The aggregate demand curve is Y = 2 × M / P, and M = 1,500. a. If the economy is initially in long-run equilibrium, what are the values of P and Y? (2 points) b. What is the velocity of money in this case? (2 points) c. Suppose because banks start paying interest on checking accounts, the aggregate demand function shifts to Y = 1.5 × M / P. What are the short-run values of P and Y? (2 points). d. What is the velocity of money in this case? (2 points) e. With the new aggregate demand function, once the economy adjusts to long-run equilibrium, what are P and Y? (2 points).

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5. AD-AS Numerical Analysis (10 points). Assume that the long-run aggregate supply curve is vertical...

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