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QUESTION 1 Suppose that the behavior of households, firms and the government in an economy is...
QUESTION 2 Suppose that the behavior of households, firms and the government in an economy is...
QUESTION 2 Suppose that the behavior of households, firms and the government in an economy is determined by the following equations: C-30+0.75Yd 11-30 G-75 7. 20+0.2Y TR-40 The full employment level of output in the economy is: YFE=400 Find an expression for aggregate expenditure (This should take the form of AE = a +by, where a and are numbers) II. What is the equilibrium level of output? YE ill. Calculate the level of taxes in this economy. T = iv....
B,c,d,e please solve Suppose in the economy autonomous consumption - $100, autonomous investmen $120, government purchases...
B,c,d,e please solve
Suppose in the economy autonomous consumption - $100, autonomous investmen $120, government purchases G-$400 lump-sum taxes = $70, transfers Tr-$20, exports Er $150 autonomous imports im = $30, marginal propensity to consume mpc = 0.8, proportional income tax rate 1-20%, marginal propensity to invest mpi-0.1, and marginal propensity to imports mpm-0.4 (a) For this economy calculate (i) the amount of autonomous spending: (ii) the value of the spending multiplier; (iii) the equilibrium level of output; (iv) the...
Question 3: Multiplier Model (20 Points] Suppose the components of a closed economy can be described...
Question 3: Multiplier Model (20 Points] Suppose the components of a closed economy can be described by the following set of equations: Y=C+I+G C= 1200 +0.8 (Y-T) I = 750 G = 900 T=950 (a) Is the government currently running a balanced budget, a budget deficit or a budget surplus? Explain. [3 Points (b) Calculate the equilibrium income. [6 Points) (c) Graphically illustrate, using the Keynesian Cross Diagram, the effect of a decrease in government spending on equilibrium output. [5...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a....
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
Question 5: Equilibrium in the goods market Use the following information to answer the question(s) below....
Question 5: Equilibrium in the goods market Use the following information to answer the question(s) below. C=250+.75YD I = 250 1. Y to video Mosantoni vigou nomor G= 200 que vol 1) y lo s odabrow ni inte bus T= 200 (i.e. taxes are autonomous or exogenous) where C=Consumption spending; Yp=disposable income; I=investment spending; G- government spending: and T-taxes paid minus government transfers received by consumers. Remember that Yp=Y-T). (a) Determine the equilibrium level of output and the equilibrium level...
An economy is initially at full employment, but a decrease in planned investment spending (a component...
An economy is initially at full employment, but a decrease in planned investment spending (a component of autonomous expenditure) pushes the economy into recession. Assume that the mpc of this economy is 0.75 and that the multiplier is 4. LO4, L05) a. How large is the recessionary gap after the fall in planned investment? b. By how much would the government have to change its purchases to restore the economy to full employment? c. Alternatively, by how much would the...
A5-10. Suppose the following aggregate expenditure model describes an economy: C = 100 + (5/6)Yd T...
A5-10. Suppose the following aggregate expenditure model describes an economy: C = 100 + (5/6)Yd T = (1/5)Y 1 = 200 G = 400 X = 300 IM = (1/3)Y where C is consumption, Yd is disposable income, T is taxes, Y is national income, I is investment, G is government spending, X is exports, and IM is imports. (a) Derive a numerical expression for aggregate expenditure (AE) as a function of Y. Calculate the equilibrium level of national income....
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
Answer parts a-d Problem 3: (30 points) Suppose we have an open economy with a government...
Answer parts a-d
Problem 3: (30 points) Suppose we have an open economy with a government entity such that the economy is defined by the following functions: C = 100+ 0.5Yd i = 50 G = 100 a. Find the equilibrium level of income in this economy. (5 points) b. What is the multiplier in this economy? (3 points) c. Suppose governments transfers increases to 100, what is the effect of this change on the equilibrium level of income? What...
Answer parts e-h Problem 3: (30 points) Suppose we have an open economy with a government entity such that the economy...
Answer parts e-h
Problem 3: (30 points) Suppose we have an open economy with a government entity such that the economy is defined by the following functions: C = 100+ 0.5Yd i = 50 G = 100 a. Find the equilibrium level of income in this economy. (5 points) b. What is the multiplier in this economy? (3 points) c. Suppose governments transfers increases to 100, what is the effect of this change on the equilibrium level of income? What...
QUESTION 2 Suppose that the behavior of households, firms and the government in an economy is determined by the following equations: C-30+0.75Yd 11-30 G-75 7. 20+0.2Y TR-40 The full employment level of output in the economy is: YFE=400 Find an expression for aggregate expenditure (This should take the form of AE = a +by, where a and are numbers) II. What is the equilibrium level of output? YE ill. Calculate the level of taxes in this economy. T = iv....
B,c,d,e please solve
Suppose in the economy autonomous consumption - $100, autonomous investmen $120, government purchases G-$400 lump-sum taxes = $70, transfers Tr-$20, exports Er $150 autonomous imports im = $30, marginal propensity to consume mpc = 0.8, proportional income tax rate 1-20%, marginal propensity to invest mpi-0.1, and marginal propensity to imports mpm-0.4 (a) For this economy calculate (i) the amount of autonomous spending: (ii) the value of the spending multiplier; (iii) the equilibrium level of output; (iv) the...
Question 3: Multiplier Model (20 Points] Suppose the components of a closed economy can be described by the following set of equations: Y=C+I+G C= 1200 +0.8 (Y-T) I = 750 G = 900 T=950 (a) Is the government currently running a balanced budget, a budget deficit or a budget surplus? Explain. [3 Points (b) Calculate the equilibrium income. [6 Points) (c) Graphically illustrate, using the Keynesian Cross Diagram, the effect of a decrease in government spending on equilibrium output. [5...
1. To stimulate economic activity during a severe recession, the strongest appropriate fiscal policy is: a. an increase in taxes and/or an increase in government spending b. an increase in taxes and/or a decrease in government spending c. a decrease in taxes and/or an increase in government spending d. a decrease in taxes and/or a decrease in government spending e. a decrease in government purchases and/or a decrease in transfer payments 2. An increase in income tax rates: a. makes...
Question 5: Equilibrium in the goods market Use the following information to answer the question(s) below. C=250+.75YD I = 250 1. Y to video Mosantoni vigou nomor G= 200 que vol 1) y lo s odabrow ni inte bus T= 200 (i.e. taxes are autonomous or exogenous) where C=Consumption spending; Yp=disposable income; I=investment spending; G- government spending: and T-taxes paid minus government transfers received by consumers. Remember that Yp=Y-T). (a) Determine the equilibrium level of output and the equilibrium level...
An economy is initially at full employment, but a decrease in planned investment spending (a component of autonomous expenditure) pushes the economy into recession. Assume that the mpc of this economy is 0.75 and that the multiplier is 4. LO4, L05) a. How large is the recessionary gap after the fall in planned investment? b. By how much would the government have to change its purchases to restore the economy to full employment? c. Alternatively, by how much would the...
A5-10. Suppose the following aggregate expenditure model describes an economy: C = 100 + (5/6)Yd T = (1/5)Y 1 = 200 G = 400 X = 300 IM = (1/3)Y where C is consumption, Yd is disposable income, T is taxes, Y is national income, I is investment, G is government spending, X is exports, and IM is imports. (a) Derive a numerical expression for aggregate expenditure (AE) as a function of Y. Calculate the equilibrium level of national income....
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
Answer parts a-d
Problem 3: (30 points) Suppose we have an open economy with a government entity such that the economy is defined by the following functions: C = 100+ 0.5Yd i = 50 G = 100 a. Find the equilibrium level of income in this economy. (5 points) b. What is the multiplier in this economy? (3 points) c. Suppose governments transfers increases to 100, what is the effect of this change on the equilibrium level of income? What...
Answer parts e-h
Problem 3: (30 points) Suppose we have an open economy with a government entity such that the economy is defined by the following functions: C = 100+ 0.5Yd i = 50 G = 100 a. Find the equilibrium level of income in this economy. (5 points) b. What is the multiplier in this economy? (3 points) c. Suppose governments transfers increases to 100, what is the effect of this change on the equilibrium level of income? What...
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