QUESTIONS:
PART A: (The Structure of the Economy)
Project the following values for the Kazakhstan economy in 1998:
1. The autonomous spending
multiplier ________________
2. Autonomous consumption ________________
3. Exports ________________
4. Government spending ________________
4. Real Money Supply (M/P) ________________
PART B: (Calculating the IS Curve)
For each of the following assumed interest rates, calculate Investment,
Autonomous spending and equilibrium GDP.
Interest Investment Autonomous GDP
Rate Spending
3 __________ __________ __________
4 __________ ___________ __________
5 __________ ___________ __________
In the space below plot the IS curve. (Label your axes.)
_____________________
PART C: (Calculating the LM Curve)
For each of the following assumed levels of GDP, calculate the equilibrium
interest rate.
GDP Interest rate
100 __________
200 __________
300 __________
PART D: (Determining the equilibrium values)
In the space below, plot the IS curve and the LM curve. (Label your axes.)
____________________
What are the equilibrium levels of:
The interest rate _________________
GDP _________________
PART F: (Calculating the effect of fiscal policy)
Assume that Government expenditures on goods and services are increased
from 5 to 10.
G = 10
1. For each of the following assumed interest rates, calculate Investment,
Autonomous spending and equilibrium GDP.
Interest Investment Autonomous GDP
Rate Spending
3 __________ __________ __________
4 __________ ___________ __________
5 __________ ___________ __________
2. In the space below, plot the LM curve, the old IS curve and the new IS
curve. (Label your axes.)
____________________
3. What has happened to equilibrium GDP ? _____________________
4. What has happened to the interest rate?_____________________
PART F: (Calculating the effect of monetary policy)
Assume that the nominal money supply has been increased from 200 to 700.
M = 700
1. For each of the following assumed levels of GDP, calculate the equilibrium
interest rate.
GDP Interest rate
100 __________
200 __________
300 __________
2. In the space below plot the new IS curve, the old LM curve and the new
LM curve.
____________________________
3. What has happened to equilibrium GDP ? _____________________
4. What has happened to the interest rate?_____________________
5. What will happen to Investment spending? ___________________
6. What will happen to economic growth? _______________________
PART B: (Calculating the Aggregate Demand Curve)
Assume that there have been no changes in fiscal policy or monetary policy.
G = 5
M = 200
Assume that the price level will double in 1998.
P = 200
A. Project the new values for the Kazakhzstan economy in 1998:
1. The autonomous spending
multiplier ________________
2. Autonomous consumption ________________
3. Exports ________________
4. Government spending ________________
4. Real Money Supply (M/P) ________________
B. Calculate the new IS and LM curves
1. For each of the following assumed interest rates, calculate Investment,
Autonomous spending and equilibrium GDP.
Interest Investment Autonomous GDP
Rate Spending
3 __________ __________ __________
4 __________ ___________ __________
5 __________ ___________ __________
2. For each of the following assumed levels of GDP, calculate the equilibrium
interest rate.
GDP Interest rate
100 __________
200 __________
300 __________
C. In the space below plot the new IS and LM curves. (Label the axes.)
__________________
D. On the basis of your graph, what do you estimate are the approximate
new equilibrium levels of:
The interest rate _________________
GDP _________________
E. In the space below, plot points on the aggregate demand curve.
1. for P = 100 GDP = ____________
2. for P = 200 GDP = ____________
and draw a line connecting those two points. (Label you axes.)
____________________
F. What would happen to the AD curve if:
1. there was an increase in Government spending (G) ___________________________________
2. there was an increase in the nominal money supply (M)?
____________________________________