Question

pically TISS. level of out rate, or the inflation rate? lowing typic employment rate uring the 1930s w the Grear Great Depression differ? the nodel laid out in Who spends? Who saves? we? Who is the definition of a iffer from measured GDP? 11, List five factors, aside from the level of in level of output, the that can affect the level of consumption macroeconomy. how did economists' opinions 2 12. Why isn't the interest rate included in the Key consumption function? in this chapter, who receives 13. What did Keynes think was the most imp factor in determining investment behavior? of aggregate demand? How 14. What determines aggregate demand in the K ian model? Draw and label a graph. rise equilibrium in a 15. Do firms always end up investing the amou they intend? Why or why not? leakage from the circular 16. Draw a "Keynesian cross" diagram, carefully ing the curves and the equilibrium point. in saving (if not balanced by an 17. Describe how adjustment to equilibrium oc the Keynesian model. 18. Does a macroeconomy's being "in equili always mean it is in a good state? Why es i dilter tions comprise equilibrium in What conditions conomy? ving is described as a How is it a leakage? can an increase in rease in intended ended investment) cause a shrinkage utput-income-spending flow? he classical market for loanable funds. he actors, and what do they each do? problem of leakages is solved in Describe the clas Who are the actor 8852 Describe how the prohi the classical model did Keynes model consumption behavior? not? 19. What is the income/spending multiplier"? why a drop in autonomous intended investm in autonomous consumption, leads to a much drop in equilibrium income. Draw and label a graph. ISROSES Carefully draw and label a supply-and-demand diagram for the classical loanable funds market. Assuming that the market starts and ends in equi- ibrium, indicate what happens if there is a sudden drop in households' desire to consume. 2. Which curve shifts and in what direction? b. What happens to the equilibrium amount of Joanable funds borrowed and lent? (You do not need to put numbers on the graph-just indicate the direction of the change.) . What happens to the equilibrium interest rate? What happens to the equilibrium amount of investment? pose that you see a toy store increasing its inven- nes in early December, right before the Christmas/ Kah/Kwanzaa season. Is this a case of excess calory accumulation? Why or why not? pose that the relation between consumption and to make a table similar to Table 9.2 text.) c. What is the level of saving when income i to 0? 360? 500? 600? d. As income rises from 500 to 600, by how does consumption rise? What formula you use to derive the mpc from your to this question, if you did not know t already? e. Graph this consumption function, alor a 45º "consumption = income" line. La slope and intercept, and show how the savings when income is equal to 600 _found on this graph. 4. Draw a Keynesian cross graph and assum the macroeconomy starts and ends in equil Label the initial aggregate demand line AL show what happens in the diagram when consumer wealth raises C (autonomous co tion) in your diagram. (This event might ha the stock market or the housing market enje price increases. You do not need to put on the graph-just indicate the direction change.) come is C = 90 +0.75 Y. for each additio teive, how much do each additional dollar that households re- bow much do they save? How much do hey spend? What is the level o sequal to 075 level of consumption when income alto 02360? 500? 600? (You may want

question #3 a,b,c,d,e
I am confused thankyou

Answer 1

I c = go to.75y H Rise in hucome: 600-500 = 100 Rise in Consumption = 10000.75 775) 0.75 is upc which means en 75 l. of Income is consumed and ast. is saved. (6) co = 90 +0.75 (0) = 190 (360 = got 0.75 (360) a got 270 = 360] a 1500 = 90 +0.75 (500) - got 375 = [415] To = gotorsy) 60 Saning 540 consumption - 9ot 450 - 1540 S = = -( +(1-()'Y -90 +0.254 slog - - got 0.25xo - -go +0.25 8360 0 = -9ot0.25 (500) - - got 125 = - go +0.25 (600) 2160