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5. Suppose that aggregate demand (AD-C+I+G) can be described by the following equations. C = 500+...
4. Suppose that the aggregate level of spending on consumer goods in an economy can be...
4. Suppose that the aggregate level of spending on consumer goods in an economy can be represented by the following equation: C = a + b* (Y-T) = 500 + 0.7*(Y-T) where 0.7 is the marginal propensity to consume (i.e. how much of each new dollar of income is spent on consumer goods) or “b”, Y is national income (or GDP) and T is the tax burden on consumers. (29 points total) a) Total nominal income is $200 billion while...
6. Suppose that the long run aggregate production function can be written as Y = A*F(K,...
6. Suppose that the long run aggregate production function can be written as Y = A*F(K, L), where Y is the value of aggregate supply of goods and services, A is a measure of the level of technological sophistication in the economy, K is the aggregate capital stock of machinery, and L represents the labor force in the economy. The production function, which relates inputs of K and L to output is represented by F(.). (15 total points) a) Depict...
*This is from the most recent quarter of 2019* Draw and carefully describe a graph that utilizes the Aggregate Demand/Ag...
*This is from the most recent quarter of 2019* Draw and carefully describe a graph that utilizes the Aggregate Demand/Aggregate Supply model that would illustrate the current state of the aggregate economy in the United States. Your graph needs to be clearly labeled and explained in some detail. Make sure that your graph includes an aggregate demand (AD) curve, a short run aggregate supply (SRAS) curve, and a long run aggregate supply curve (LRAS, Potential GDP) curve. You should clearly...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium...
Given a downward-sloping aggregate demand (AD) curve and an upward-sloping short-run aggregate supply curve (SRAS), equilibrium occurs where the two intersect. The value on the vertical axis is the equilibrium price level and the value on the horizontal axis is the equilibrium value of real GDP or output. What happens to the economy when AD shifts? It is useful to sketch a graph and show the shift. Suppose, for example, interest rates fall or wealth increases due to a stock...
ONLY 5-11 BELOW A5-10. Suppose the following aggregate expenditure model describes an economy: C = 100...
ONLY 5-11 BELOW A5-10. Suppose the following aggregate expenditure model describes an economy: C = 100 + (5/6)Yd T = (1/5)Y I = 200 G = 400 X = 300 IM = (1/3)Y where C is consumption, Yd is disposable income, T is taxes, Y is national income, I is investment, G is government spending, X is exports, and IM is imports. (a) Derive a numerical expression for aggregate expenditure (AE) as a function of Y. Calculate the equilibrium level...
Suppose the following table represents the market demand and supply: Price per apple (P) Quantity demanded...
Suppose the following table represents the market demand and supply: Price per apple (P) Quantity demanded ( $2 $4.5 $8 Quantity supplied (Q) 10 35 70 64 16 a (10 points) Calculate the linear demand function: Q-a -bP. Draw the linear demand in a graph with price in the vertical axis and quantity demanded in the horizontal axis. Label all points including the intercept terms. Calculate the slope of the linear demand function What is the economic meaning of the...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in the...
Suppose an economy is characterized by the following equations C-260+0.6 Yd Yd-Y-T I-250 G-250 T =...
Suppose an economy is characterized by the following equations C-260+0.6 Yd Yd-Y-T I-250 G-250 T = 200 Is this econ Determine the following: omy closed or open? Explain 1) The equilibrium level of GDP (Y) 2) The total disposable income (%) of the household 3) Total consumption expenditure 4) Private savings of household, government savings and the national savings of the economy 5) Is private savings the same as aggregate investment? Explain
suppose the annual level of aggregate demand is given by AD=40+0.8Y where Y is annual GDP....
suppose the annual level of aggregate demand is given by AD=40+0.8Y where Y is annual GDP. Find out the amount of daily rate of involuntary change in inventory, when producers planned income level is (i) Y=380 and (ii) Y= 520 Suppose that a country devalues its currency by 13% but at the same time domestic prices rise by 11%. What real devaluation has been achieved? What if prices have risen by 16%?
1. Aggregate expenditure and income The following table shows consumption (C), investment (I), government purchases (G),...
1. Aggregate expenditure and income The following table shows consumption (C), investment (I), government purchases (G), and net exports (X−IM) in a hypothetical economy for various levels of real GDP (Y). Assume that the price level remains unchanged at all levels of income. All figures are in billions of dollars. Compute total expenditure for each income level, and fill in the last column in the following table. Y C I G X−IM Total Expenditure 500 300 150 200 -100 600...
4. Suppose that the aggregate level of spending on consumer goods in an economy can be represented by the following equation: C = a + b* (Y-T) = 500 + 0.7*(Y-T) where 0.7 is the marginal propensity to consume (i.e. how much of each new dollar of income is spent on consumer goods) or “b”, Y is national income (or GDP) and T is the tax burden on consumers. (29 points total) a) Total nominal income is $200 billion while...
6. Suppose that the long run aggregate production function can be written as Y = A*F(K, L), where Y is the value of aggregate supply of goods and services, A is a measure of the level of technological sophistication in the economy, K is the aggregate capital stock of machinery, and L represents the labor force in the economy. The production function, which relates inputs of K and L to output is represented by F(.). (15 total points) a) Depict...
Suppose the following table represents the market demand and supply: Price per apple (P) Quantity demanded ( $2 $4.5 $8 Quantity supplied (Q) 10 35 70 64 16 a (10 points) Calculate the linear demand function: Q-a -bP. Draw the linear demand in a graph with price in the vertical axis and quantity demanded in the horizontal axis. Label all points including the intercept terms. Calculate the slope of the linear demand function What is the economic meaning of the...
Using the IS-LM and Aggregate Supply-Aggregate Demand (AS-AD) models of Chapter 12 with a flat short-run AS curve (that is, completely sticky prices), suppose the economy is at the natural rate of unemployment and so, at long-run equilibrium. Suddenly, taxes are reduced with no change in government spending. Tell me (or show on a graph) what happens to the IS and/or LM curves. Show on a different graph what happens on the AS-AD diagram in the short-run (drawing in the...
Suppose an economy is characterized by the following equations C-260+0.6 Yd Yd-Y-T I-250 G-250 T = 200 Is this econ Determine the following: omy closed or open? Explain 1) The equilibrium level of GDP (Y) 2) The total disposable income (%) of the household 3) Total consumption expenditure 4) Private savings of household, government savings and the national savings of the economy 5) Is private savings the same as aggregate investment? Explain
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