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Author Question: Explain what effect an increase in future expected output will have on the IS curve and LM curve in ... (Read 112 times)

sabina

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on: Jun 30, 2018
Explain what effect an increase 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

Which of the following are reported as liabilities on a bank's balance sheet?
 
  A) reserves
  B) checkable deposits
  C) consumer loans
  D) deposits with other banks


jordangronback

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Reply #1 on: Jun 30, 2018
Answer to Question 1

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

Answer to Question 2

B


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sabina

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Reply #2 on: Jun 30, 2018
Thank you


jordangronback

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Reply #3 on: Jun 30, 2018
No problemo


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