Answer to Question #73328 in Macroeconomics for Remi Djimi

Question

Part III: Diagram & Analysis
(f) Expansionary Monetary Policy: Suppose the money supply increased to M=P = 1840. Solve
for Y,i,C, and I, (repeat parts (a) through (e)) and describe in words the eects of an expansionary
monetary policy. Show the change on the diagram below. Label your diagram. Identify the old and
the new equilibrium.
(g) Expansionary Fiscal Policy: Suppose the money supply is at its initial value of 1600 but gov-
ernment increases its spending to G = 400. Solve for Y,i,C, and I, (repeat parts (a) through (e))
and describe in words the eects of an expansionary scal policy. Show the change on the diagram
below. Label your diagram. Identify the old and the new equilibrium.