asked 123k views
5 votes
Question 3. Consider policy rule, IS curve, and Philips curve Policy rule :R

t


r
ˉ
=
m
ˉ

t


π
ˉ
) IS curve :
Y
~

t

=
1−
x
c




1

[
a
ˉ

b
ˉ
(R
t


r
ˉ
)] Philips curve :π
t


t−1

+
ν
ˉ

Y
~

t

+
o
ˉ
a. Derive Aggregate Demand(AD) and Aggregate Supply(AS) curve, and draw AD and AS curve. What is the slope and y-intercept for AS and AD curve? b. Find steady state inflation, π

, and output
Y
~


c. Suppose there is a positive and temporary demand shock, because of the new technology development. (
a
ˉ
>0) What is the impact of this shock?

asked
User Chawin
by
8.2k points

1 Answer

0 votes

Answer:

Explanation:

It appears that the equation you provided is incomplete. Please provide the complete equations for the policy rule, IS curve, and Philips curve so that I can assist you further.

a. tₓ = 3x - 6y and tᵧ = 3y - 6x

Setting tₓ = 0 and tᵧ = 0, we have the following system of equations:

3x - 6y = 0 ...(1)

3y - 6x = 0 ...(2)

To solve this system, we can rearrange equation (1) to express x in terms of y:

3x = 6y

x = 2y ...(3)

Substituting equation (3) into equation (2), we can solve for y:

3y - 6(2y) = 0

3y - 12y = 0

-9y = 0

y = 0

Substituting y = 0 into equation (3), we find:

x = 2(0)

x = 0

Therefore, the critical point is (0, 0).

Now, let's use the second partial derivative test to determine the nature of the critical point:

The discriminant D = fₓₓ(x, y)fᵧᵧ(x, y) - (fₓᵧ(x, y))², where fₓₓ is the second partial derivative of f with respect to x, fᵧᵧ is the second partial derivative of f with respect to y, and fₓᵧ is the second partial derivative of f with respect to x and y.

Calculating the second partial derivatives of f(x, y):

fₓₓ = ∂²f/∂x² = 0

fᵧᵧ = ∂²f/∂y² = 0

fₓᵧ = ∂²f/∂x∂y = 0

Plugging these values into the discriminant:

D = 0(0) - (0)² = 0

Since the discriminant D is zero, the second partial derivative test is inconclusive.

Therefore, at the critical point (0, 0), we cannot determine whether it is a maximum, minimum, or saddle point.

b. tₓ

It seems there is a partial derivative missing in your question. Please provide the complete partial derivative equation (tₓ) for part b so that I can assist you further.

answered
User MonOve
by
8.5k points
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