The following equations describe the domestic economy: C 20+0.8Y I 0, G 0 X 0.03Y, and...
E. The following equations describe the domestic economy: C = 20+ 0.8Y I = 0, G =0, X = 0.03Y* and Q=0.3Y And the following equations describe the foreign economy: C* = 200+ 0.8Y I* = 0, G* = 0, X* = 75 +0.25Y, and Q* = 0.1Y* Suppose the real exchange rates in both economies are fixed and equal to one. 1. Find equilibrium Y and Y*. 2. Suppose that the domestic economy experiences a 10% drop in its...
Suppose that the economy is characterized by the following behavioral equations: C= 130 + 0.8Y 1 = 170 G = 150 T = 100 Equilibrium output (Y) = (Round your response to the nearest integer.)
Equations for C, I, G, and NX are given below. If the equilibrium level of output is $21,500, what will the new equilibrium level of output be if investment increases by 1,000? C = 1,500 + CY 1 = 1,000 G = 2,000 NX = -200 a) Not enough information is given to answer the question. Ob) $22,000 Oc) $21,500 d) $22,500 If the consumption function is defined as C = 1,250 +0.8Y, and Y = 20,000, what is the...
1. Consider the following open economy. C 0.8Y, 0, 1 G 25 NX 20 -0.37 + 10€ and LU 1. where NX are net exports and e is the real exchange rate. (a) What is the equilibrium level of output? [3 marks] (b) What are the net exports at the equilibrium level of output? [2 marks] (C) Suppose the government would like the net exports to be zero with out changing the equilibrium level of output. Find a mixture of...
Fantasy Island is a closed economy and is characterized by the following equations: Consumption: C = 4000+ 0.75(Y-T) Investment: I = 2000 - 5000r Government spending: G = 3500 Budget surplus = 500 Real money demand: L = 0.4Y - 2500i, where i=r+ Expected inflation: Tº = 0 Production function: Y = 10 K12L 1/2 The nominal money supply = 7250 Note: Interest rates, i and r, are expressed in decimal points, i.e., ifr=0.5, then r = 50%. Suppose the...
QUESTION TWO An economy is represented by the following set of equations: Y = C + I C = 80m + 1.6Y where Y represents aggregate expenditure C represents consumption expenditure by households I represents investment expenditure by firms M is millions of Ghana cedis (a) (i) Explain why the model is not an open economy? (2 marks) (ii) Explain investment expenditure (I) as used in the model. (3 marks) (b) Using the consumption function, estimate the autonomous consumption; marginal...
Suppose that the following equations describe an economy. Y = Cd + Id + G Cd = 180 + 0.8(Y – T) Id = 140 – 8r + 0.1Y T = 400 G = 400 (Md/P) = 6Y – 120i MS = 6000 i = πe + r Assume expected inflation πe = 0 and price level P = 1. Find the equation for the IS curve. Find the equation for the LM curve. Find the equilibrium values for output...
Imagine the economy is defined by the consumption function of C = 140 + 0.9 (Yd) where 140 is autonomous consumption, 0.9 is marginal propensity to consume, and Yd is disposable income (after taxes) and Yd=Y-T, where Y is national income (or GDP) and T=Tax Revenues=0.3Y (0.3 is the avg. income tax rate). To find the macro equilibrium use the following equation Y = C + I + G + (X - M). Where C=140 + 0.9(Yd), I=400, G=800, X=600,...
The following equations describe your economy: Y = C + I + G C = c(bar) +cYD YD = Y + TR – TA I = I(bar) G = G(bar) TA = tY TR = TR(bar) – rY (NOTE: c(bar), I(bar), TR(bar)= C-Bar, I-bar TR-BAR ---- The bar across the top variables indicates its autonomous) (Also, ‘t’ is a proportional tax on income, and governs the inverse relationship between transfers and income) a) Suppose that the government adopts a proposal...
Q1toQ3 1. The following equations refer to the goods market of an economy in billons of S : C=500+0.8Yp; I=80; G=300 ; T=50 Answer the following questions: (a.) Solve for the goods market equilibrium. (5%) (b.) Find equilibrium disposable income (YD). (5%) (c.) Find equilibrium consumption (C).(5%) (d.) Calculate the private savings, public savings, and investment spending.(5%) (e.) Calculate the multiplier.(5%) 2. The following are the money demand and money supply functions in an economy M=8,000 : M-25000(0.4-i) Answer the...