Consider the following numerical model:
C = 700 + 0.8YD
I = 500-2000i+0.1Y
G = 400
T = 500
- Find the equation for the IS curve (keep in mind that YD=Y-T). If you were to draw the IS curve, what would the intercept (where the IS curve crosses the Y vertical axis) be? (and find the intercept in relation to Y - ie in the form Y=a-bi where a is the intercept)
- If G increases from 400 to 600, how much income (Y) changes for any given level of the interest rate in the goods-market equilibrium?
- If T decreases from 500 to 300, how much income (Y) changes for any given level of the interest rate in the goods-market equilibrium? (Add a + or - to the number you reach depending on whether the change is positive or negative)
Consider the following numerical model: C = 700 + 0.8YD I = 500-2000i+0.1Y G = 400...
Given: C = 500 + 0.8Yd where Yd = Y – T G = 200 T = 180 I = 100 Calculate the equilibrium level of national income.
Given a model: C = 400+0.8YD M = 4800 t = 20% Md/Pd = 300+0.3Y-9000i TR = 200 є = EPd/Pf I = 200 +0.2Y - 5000i G = 400 NX= 500 - 0.2Y + 0.1Y*- 60є Given price level Pd=2, Pf=4 and 1 unit of local currency can buy 5 units FX (E=5), the foreign income level is 3 times the domestic one, compose the IS and LM functions and calculate the equilibrium interest rate, output...
Consider the following Keynesian income model: E = C + I + G + X-M C = 300 + 0.85Yd Yd = Y – T T = 60 + 0.25Y; I = 400 G = 700 X = 400 M = 50 + 0.15Y In equilibrium, Y = E: a. calculate the equilibrium level of income. b. calculate the amount of taxes collected when the economy is at equilibrium level of income and show whether the government budget is in...
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1. In an economy which has a national income identity as the following; Y= C+ I + G + NX where C = 400 + 0.6 Yd,; 1 = 1000-4600 r, G-1240 T-200 +0.25 Y; NX-400-0.05Y-8 00 e ( ofcourse, Yd=Y-T) Where e- foreign currency/ domestic currency, and initially set at e 1.25+2.5R The money demand function is Md- 0.75 Y-7500 r, and money supply is set by the Central Bank at 450. All calculation...
c= 100+ 0.8 (y - t) i = 500 - 50r g= 400 t= 400 M = P(0.2y + 500 – 25r) Price level is fixed at 1. The money supply is 520 (51 marks – 3 marks each) 1. Calculate equilibrium real GDP and the interest rate.
Consider a model of the Goods Market characterized by the following equations: = C+I+G Y C+I+G с co + c(Y - T) bo+biy G 90 +91Y where bı, C1, 91 are between 0 and 1, and c1 +61 +91 < 1. Assume T is exogenous. I (a) (5 points) Derive the goods market demand curve in terms of the output (Y) and the exogenous variables: Co, C1, bo, b1, 90, 91 and T. Show your work for full credit. (b)...
Question#1AThe following are details of the expenditure of a very small economy. All the autonomous expenditures are given in $ thousand. C = 200 + 0.8Yd I = 10 G = 50 T = 0.05Y X = 40 M = 0.1Y Derive the aggregate expenditure function, and calculate the equilibrium real GDP Determine the expenditure multiplier using aggregate expenditure function slop value
Consider the following numerical example of the simple Keynesian model: C = 420 +.6YD IP = 90 G= 100 T= 100 NX = 50 where YD = disposable income (Income minus net taxes) T = net taxes i.e., taxes minus transfers) Assume that all of the above variables are measured in billions of dollars per year, and refer to real variables (i.e. adjusted for any inflation that might be happening). For example, the equation for consumption tells us that real...
An open economy is described by the following system of macroeconomic equations, in which all macroeconomic aggregate are measured in billions of Namibian dollars, N$: Y = C + I + G + X – M C = 10 + 0.8 Yd T = 10+ 0.2Y X = 80 I = 35 G = 15 TR = 10 – 0.05Y M = 22 + 0.1Y Where: Y is domestic income Yd is private disposable income C is...
1. (The IS-LM-PC model): Assume the following relations characterize the goods market: (i) 1128 +0.2Y 300(rt + xt) (iii)G,-215 :T t = 200 (iv)st= 0.15 or 15% e) Derive the IS curve (as a relation between Y and r). (b) Assume the LM curve is given by r 0.16 (ie. in period t, the central bank sets the real interest rate at 16%). What is the short-run equilibrium level of output (Yt )? (c) Suppose that L = 2000 and...