Homework Answers
Y=C+I+G+X-M
C=115+0.75Yd
Y=115+0.75Yd+150+200+40-30
Y=115+0.75(Y-T)+150+200+40-30
Y=115+0.75(Y-100)+150+200+40-30
0.25Y=40+360
0.25Y=400
Ye=1600.....Equilibrium GDP Level
Ans 2)
Aggregate Consumption
C=115+0.75(Ye-T)=115+0.75(1600-100)=490
Ans 3)
Aggregate Savings
Portion of Income that is not consumed
S=Ye-C=1110
Ans 4)
MPC=dC/dY=0.75
MPS=1-MPC=0.25
Ans 5)
Expenditure Multiplier
dG/dY=(1/(1-MPC))=(1/0.25)=4
ANs 6)
Tax Multiplier=-MPC/(1-MPC)=-0.75/0.25=-3
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Answer the following questions, which relate to the aggregate
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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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Answer the following questions, which relate to the aggregate
expenditures model:
Instructions: Enter your answer as a whole
number.
a. Given the following: Ca = $120,
Ig = $60, Xn = − $10, and
G= $30, what is the economy’s equilibrium
GDP?
b. If real GDP in an economy is currently $230, will the
economy’s real GDP rise, fall, or stay the same?
(Click to select) Real GDP will
rise. Real GDP will fall. Real
GDP stay the same.
c. Suppose that full-employment...
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