Write an investment function (equation)

Suppose that the quantity of corn supplied depends on the price of corn (P) and the amount of rainfall (R). The demand for corn depends on the price of corn and the level of disposable income (I). The equations describing the supply and demand relationships are Qs=20R+100Pand Qd =4000-100P+10I.

a) Sketch a graph of demand and supply curves

In the face of the global pandemic (COVID-19), economic uncertainty has increased both from the point of view of consumers as well as businesses.

What does this increase in uncertainty mean for an economy of your choice in terms of output, employment, and inflation? Illustrate your answer with an AD-AS diagram.

Write an investment function (equation) that specifies two components: Autonomous investment spending and induced investment spending.

Solution:

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