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34.The formula for the multiplier in an open economy is f 1slope of the AE curve)...
3. The multiplier and the MPCConsider two closed economies that are identical except fortheir...
3. The multiplier and the MPCConsider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with real GDP and total expenditure equal to $100 billion, as shown by the black points on the following two graphs. Neither economy has taxes that change with income. The grey lines show the 45-degree line on each graph.The first economy's MPC is 0.5. Therefore, its initial total expenditure line has a slope of...
Question 3 1.5 pts The aggregate demand of an open economy is given by the after-tax...
Question 3 1.5 pts The aggregate demand of an open economy is given by the after-tax domestic consumption C, the investment I (which depends on the interest rater), the government spending G and net exports X-M: AD-C+I+G+X-M=CO+ c1 (1 - t)Y + I(r) +G+X-mY Co is autonomous consumption.c, is the marginal propensity to consume, and m is the marginal propensity to import. In the economy's equilibrium this equals its output: AD - Y. Solving for Y yields: y=(1/(1-c1(1 – t)...
Consider a hypothetical closed economy in which households spend $0.70 of each additional dollar they earn and save the remaining $0.30.
3. The multiplier effect of a change in government purchases Consider a hypothetical closed economy in which households spend $0.70 of each additional dollar they earn and save the remaining $0.30. The marginal propensity to consume (MPC) for this economy is _______ , and the spending multiplier for this economy is _______ . Suppose the government in this economy decides to decrease government purchases by $300 billion. The decrease in government purchases will lead to a decrease in income, generating an initial change...
Consider a hypothetical closed economy in which households spend$0.70 of each additional dollar they earn...
Consider a hypothetical closed economy in which households spend
$0.70 of each additional dollar they earn and save the remaining
$0.30.The marginal propensity to consume (MPC) for this economy is
_____, and the expenditure multiplier for this economy is
_____.Suppose the government in this economy decides to decrease
government purchases by $300 billion. The decrease in government
purchases will lead to a decrease in income, generating an initial
change in consumption equal to _____. This decreases income yet
again, causing...
Consider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with real income and planned expenditure equal to $100...
Consider two closed economies that are identical except for
their marginal propensity to consume (MPC). Each economy is
currently in equilibrium with real income and planned expenditure
equal to $100 billion, as shown by the black points on the
following two graphs. Neither economy has taxes that change with
income. The grey lines show the 45-degree line on each graph.The first economy's MPC is 0.5. Therefore, its initial planned
expenditure line has a slope of 0.5 and passes through the...
I don't know how to solve (e) 1. The AE diagram below shows the consumption function...
I don't know how to solve (e)
1. The AE diagram below shows the consumption function of an economy, Each box is $20x$20 Distance between 45 degree line and consumtion curve is equal to saving, Distance between 45 degree line and AE curve is equal to unplanned inventory change. 45° (a) What are the MPC, MPS, and multiplier? **** (b) What are the savings when Y=200, 400, 600? 160+ 1001 100 400 (c) What are the consumption function and saving...
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 TWO An economy is represented by the following set of equations: Y = C +...
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...
Consider two closed economies that are identical except for their marginal propensity to consume (MPC)
6. The government-purchases multiplier and the MPC Consider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with income and planned expenditure equal to $100 billion, as shown by the black Xs on the following two graphs. Neither economy has taxes that change with income. The grey lines show the 45-degree line on each graph. The first economy's MPC is 0.5. Therefore, its initial planned-expenditure function has a slope of 0.5...
Answer the following questions using the aggregate expenditures model of the economy described below. C =...
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
Question 3 1.5 pts The aggregate demand of an open economy is given by the after-tax domestic consumption C, the investment I (which depends on the interest rater), the government spending G and net exports X-M: AD-C+I+G+X-M=CO+ c1 (1 - t)Y + I(r) +G+X-mY Co is autonomous consumption.c, is the marginal propensity to consume, and m is the marginal propensity to import. In the economy's equilibrium this equals its output: AD - Y. Solving for Y yields: y=(1/(1-c1(1 – t)...
Consider a hypothetical closed economy in which households spend
$0.70 of each additional dollar they earn and save the remaining
$0.30.The marginal propensity to consume (MPC) for this economy is
_____, and the expenditure multiplier for this economy is
_____.Suppose the government in this economy decides to decrease
government purchases by $300 billion. The decrease in government
purchases will lead to a decrease in income, generating an initial
change in consumption equal to _____. This decreases income yet
again, causing...
Consider two closed economies that are identical except for
their marginal propensity to consume (MPC). Each economy is
currently in equilibrium with real income and planned expenditure
equal to $100 billion, as shown by the black points on the
following two graphs. Neither economy has taxes that change with
income. The grey lines show the 45-degree line on each graph.The first economy's MPC is 0.5. Therefore, its initial planned
expenditure line has a slope of 0.5 and passes through the...
I don't know how to solve (e)
1. The AE diagram below shows the consumption function of an economy, Each box is $20x$20 Distance between 45 degree line and consumtion curve is equal to saving, Distance between 45 degree line and AE curve is equal to unplanned inventory change. 45° (a) What are the MPC, MPS, and multiplier? **** (b) What are the savings when Y=200, 400, 600? 160+ 1001 100 400 (c) What are the consumption function and saving...
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 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...
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
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