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Posted: March 2nd, 2020

Cyclical Unemployment Assignment | Homework For You

1. The graph above shows the AD/LRAS/SRAS functions for a country.

2. In the short run, wages and prices are sticky due to contracts, but they fully adjust to market conditions in the long run.

3.Marginal propensity to consume is MPC = 0.80

4.Okun’s coefficient equals α = 2.

5. Currently, all the markets are in equilibrium.

6. There is no foreign trade and so net exports equal zero.

7. Currently the government purchases equal G = 1,000 units.

8. All the questions refer independently to this baseline scenario.

9. The short run effects of a policy or an event on P and Y are defined as the values of these variables after the AD function shifts but before the SRAS function begins shifting.

question1:

1. Investment spending goes down by ΔI = -180. What will be the short-run effects on P and Y?

2. Investment spending goes down by ΔI = -180. What will be the short-run effect on cyclical unemployment rate? What will be the long-run effect on cyclical unemployment rate?By short-run and long-run effects, I mean the new values of the variables after the occurrence of an event. Economics Assignment: I need help writing a research paper.

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