Consider an economy which experiences the destruction of some of the nation’s capital stock (say through...
Consider an economy which experiences the destruction of some of the nation’s capital stock (say through a hurricane is destroyed). How should this effect equilibrium, consumption, output and labor supply? Now, let’s say the government tries to offset some of the effects of the decline in capital by increasing government spending. What is the likely outcome of this policy intervention in terms of restoring consumption, output and labor supply to its pre hurricane levels?
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Consider an economy which experiences the destruction of some of
the nation’s capital stock (say through...
10. Consider a one-period economy which experiences the destruction of some of the nation’s capital stock...
10. Consider a one-period economy which experiences the destruction of some of the nation’s capital stock (say through a hurricane is destroyed). How should this effect equilibrium, consumption, output and labor supply? Now, let’s say the government tries to offset some of the declines in capital on output and hours worked by increasing government spending. What is the likely outcome of this policy intervention in terms of consumption?
10. Consider a one-period economy which experiences the destruction ofsome of the nation’s capital stock (say...
10. Consider a one-period economy which experiences the destruction ofsome of the nation’s capital stock (say through a hurricane is destroyed). How should this effect equilibrium, consumption, output and labor supply? Now, let’s say the government tries to offset some of the declines in capital on output and hours worked by increasing government spending. What is the likely outcome of this policy intervention in terms of consumption?
22) Using classical theory, an increase in the capital stock, other things equal, would cause 22)...
22) Using classical theory, an increase in the capital stock, other things equal, would cause 22) A) output to rise and price levels to fall B) output and prices to both rise C) a decrease in equilibrium employment D) an increase in labor supply and output 23) In the classical model; an increase in government spending funded by borowing would 23) A) increase demand for loanable funds, resulting in more consumption spending B) induce households to save more and firms...
Consider the following static (closed-economy) version of the Classical model: Y = F (K, L) C...
Consider the following static (closed-economy) version of the Classical model: Y = F (K, L) C = A + a(Y − T ), with A > 0 and 0 < a < 1, I = B − br, with B, b > 0, where A and B represent respectively the autonomous components of consumption (C) and investment (I). Assume the factor inputs, K (capital) and L (labor), are fixed in supply. Finally, assume that government expenditures (G) and taxes (T)...
Competitive Equilibrium (10 pts) Consider an economy with a representative consumer, a representative firm, and a...
Competitive Equilibrium (10 pts) Consider an economy with a representative consumer, a representative firm, and a government. • The consumer can work up to h hours at an hourly rate of w. She only gets utility from consumption and does not care about how much she works. Their preferences are represented by the utility function U(C, l) = ln(C). The consumer also owns an exogenously given K units of capital, which they can rent to the firms at a price...
Answer parts a-d. Problem 2: (20 points) Consider an economy which is closed and has no...
Answer parts a-d.
Problem 2: (20 points) Consider an economy which is closed and has no government. Suppose the consumption function is given by C = 50+ 0.4Y and the investment is given as I = 25. a. What is the equilibrium level of income in this case? (5 points) b. What is the level of saving in equilibrium? (2 points) c. If, for some reason, output is at the level of 300, what is the level of involuntary inventory...
Answer parts e-f Problem 2: (20 points) Consider an economy which is closed and has no government. Suppose the consumpt...
Answer parts e-f
Problem 2: (20 points) Consider an economy which is closed and has no government. Suppose the consumption function is given by C 50 0.4Y and the investment is given as I 25 a. What is the equilibrium level of income in this case? (5 points) b. What is the level of saving in equilibrium? (2 points) c. If, for some reason, output is at the level of 300, what is the level of involuntary inventory accumulation? Is...
9. Refer to the Figure13-2. If the economy were initially in equilibrium at r0 and E0...
9. Refer to the Figure13-2. If the economy were initially in equilibrium at r0 and E0 and the government removed import quotas, what would happen to the exchange rate? a. It would appreciate to E1. b. It would appreciate to E2. c. It would depreciate to E1. d. It would depreciate to E2. ____ 10. When a country experiences capital flight, which of the following best explains the effects? a. The interest rate falls because the demand for loanable funds shifts left....
1. (45 points) Consider the closed-economy one-period macroeconomic model developed in class. The...
1. (45 points) Consider the closed-economy one-period macroeconomic model developed in class. The consumer is endowed with h units of time, and chooses consumption C and leisure ` to maximize U = log(C) + θlog(`), subject to the budget constraint C = wNs + π. Production is described by Y = zNd . Government spending G is financed with a proportional revenue tax (tax rate τ ) on the firm. (a) (10) Find the firm’s optimal demand for labor Nd...
2. Identifying symptoms of the Dutch Disease Consider the economy of Brazil, which produces coffee and...
2. Identifying symptoms of the Dutch Disease Consider the economy of Brazil, which produces coffee and medical equipment that are sold both domestically and internationally. Suppose an Increase in foreign income causes an increase in the world demand for coffee, whereas the supply does not change. The following graph shows the market for coffee in Brazil. Adjust the following graph to show the effect of a higher demand for coffee on the economy of Brazil Note: Select and drag one...
Answer parts a-d.
Problem 2: (20 points) Consider an economy which is closed and has no government. Suppose the consumption function is given by C = 50+ 0.4Y and the investment is given as I = 25. a. What is the equilibrium level of income in this case? (5 points) b. What is the level of saving in equilibrium? (2 points) c. If, for some reason, output is at the level of 300, what is the level of involuntary inventory...
Answer parts e-f
Problem 2: (20 points) Consider an economy which is closed and has no government. Suppose the consumption function is given by C 50 0.4Y and the investment is given as I 25 a. What is the equilibrium level of income in this case? (5 points) b. What is the level of saving in equilibrium? (2 points) c. If, for some reason, output is at the level of 300, what is the level of involuntary inventory accumulation? Is...
2. Identifying symptoms of the Dutch Disease Consider the economy of Brazil, which produces coffee and medical equipment that are sold both domestically and internationally. Suppose an Increase in foreign income causes an increase in the world demand for coffee, whereas the supply does not change. The following graph shows the market for coffee in Brazil. Adjust the following graph to show the effect of a higher demand for coffee on the economy of Brazil Note: Select and drag one...
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