« previous next »

Author Question: Explain what effect a reduction in future expected output will have on the IS curve and LM curve in ... (Read 88 times)

joblessjake

  • Hero Member
  • *****
  • Posts: 555
on: Jun 30, 2018
Explain what effect a reduction in future expected output will have on the IS curve and LM curve in the current period.
 
  What will be an ideal response?

Question 2

Channeling funds from individuals with surplus funds to those desiring funds when the saver does not purchase the borrower's security is known as
 
  A) barter.
  B) redistribution.
  C) financial intermediation.
  D) taxation.


laurnthompson

  • Sr. Member
  • ****
  • Posts: 334
Reply #1 on: Jun 30, 2018
Answer to Question 1

A reduction in Ye will cause human wealth to be higher. Individuals will reduce their current consumption and the IS curve will shift left. A reduction in Ye will also cause firms to decrease their expectations of future expected profits. When this occurs, the discounted present value of future profits is lower causing I to decrease. As I decreases, the IS curve shifts left. This will have no effect on the LM curve.

Answer to Question 2

C


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
« previous next »
 

Did you know?

Approximately 500,000 babies are born each year in the United States to teenage mothers.

Did you know?

Astigmatism is the most common vision problem. It may accompany nearsightedness or farsightedness. It is usually caused by an irregularly shaped cornea, but sometimes it is the result of an irregularly shaped lens. Either type can be corrected by eyeglasses, contact lenses, or refractive surgery.

Did you know?

More than 30% of American adults, and about 12% of children utilize health care approaches that were developed outside of conventional medicine.

Did you know?

The Food and Drug Administration has approved Risperdal, an adult antipsychotic drug, for the symptomatic treatment of irritability in children and adolescents with autism. The approval is the first for the use of a drug to treat behaviors associated with autism in children. These behaviors are included under the general heading of irritability and include aggression, deliberate self-injury, and temper tantrums.

Did you know?

The newest statin drug, rosuvastatin, has been called a superstatin because it appears to reduce LDL cholesterol to a greater degree than the other approved statin drugs.

Zonal wind speeds on Uranus. Shaded areas show the southern collar and its future northern counterpa Zonal wind speeds on Uranus. Shaded areas show the southern collar and its future northern counterpa
Single-dose drug administration: pharmacokinetic values for this drug are as follows: onset of actio Single-dose drug administration: pharmacokinetic values for this drug are as follows: onset of actio
The oxygen isotope curve illustrates the ratio between 16O and 18O. The oxygen isotope curve illustrates the ratio between 16O and 18O.
Insolation and the Greenhouse Effect Insolation and the Greenhouse Effect
Effect of dietary fats on high- and low-density cholesterol levels Effect of dietary fats on high- and low-density cholesterol levels
The Oxyhemoglobin Dissociation Curve The Oxyhemoglobin Dissociation Curve
Video: Forming urine ( influencing factors), Forming dilute urine & Forming concentrated urine

For a complete list of videos, visit our video library