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Aliun [14]
3 years ago
14

VI. Here we consider the paradox of saving one last time in the context of the AS-AD model. Suppose the economy begins with outp

ut equal to its natural level. Then there is a decrease in consumer confidence, as households attempt to increase their saving, for a given level of disposable income. a. In AS-AD and IS-LM diagrams, show the effects of the decline in consumer confidence in the short run and the medium run. Explain why curves shift in your diagrams. b. What happens to output, the interest rate, and the price level in the short run
Business
1 answer:
Nonamiya [84]3 years ago
6 0

Answer:

The solution to this question can be defined as follows:

Explanation:

In point a:

When consumer interest decreases, => consumers begin and save less and more, => MPC decreases; => the "IS" curve becomes flatter; => "IS" turns inside. Currently, 'AD' shows together all the goods and financial sector, => as the 'IS' curve adjusts inside the industry, => the 'AD' would also change to the left.

In point b:

Take into account the SR models of "IS-LM" and "AD-AS." 

Therefore there is the case of a full job only at the beginning; => its optimum between "IS1" and "LM" in the "IS-LM" model; as well as the main equilibrium among "AD1" and "AS" in the "AD-AS" model "E1'," => the original equilibrium among "Y=Yf," "r=r1" and "P=P1." That now the consumer is reducing the confidence, => the 'IS' curve becomes shifting IMEI 'IS2,' => provided the 'LM' curve, that new balance is 'E2.' That's why the price in the SR is calculated, the AS will change =>, however, the AD also will shift the "AD2" side and "E2'" will become the equilibrium point in the "AD-AS" system, "r=r2 <r1" and "P=P1" throughout the new "Y=Y2 <Yf" balance.

Please find the graph file in the attachment.

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3 years ago
Tiger Trade has the following cash transactions for the period.
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Answer:

1. Ending balance of cash is $31400

Explanation:

<u>1.</u>

Balance of cash at the beginning of the period is $4,300

+Cash received from sale of products to customers $ 36,500  

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<u>2.</u>

Cash Flow Statement

Cash flow from Operating Activities

Cash received from sale of products to customers $ 36,500  

Cash received for sale of services to customers 26,500  

Cash paid to merchandise suppliers (11,300 )

Cash paid to workers (23,300 )

<u>Cash paid for advertisement (3,300 )</u>

Total Cash Inflow / outflow from Operating Activity                               25,100

Cash flow from Investing Activities

Cash paid to purchase factory equipment (46,500 )

Cash received from the sale of an unused warehouse 12,300

<u>Cash paid for dividends to stockholders (5,300 )</u>

Total Cash Inflow / outflow from Investing Activity                             (39,500 )

Cash flow from Financing Activities

<u>Cash received from the bank for long-term loan 41,500</u>

Total Cash Inflow / outflow from Financing Activity                                41,500

Net cash Inflow / Outflow                                                                         27,100

Balance of cash at the beginning of the period is                                   <u>4,300</u>

Balance of cash at the beginning of the period is                                 <u>31,400</u>

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