Ca = 1500 – 20 r c = 0.6 G = T = 2000 Ip =...
Ca = 1500 – 20 r c = 0.6 G = T = 2000 Ip = 2500 – 40 r NX = - 300 Derive Ap as a function of interest rate Calculate general multiplier Derive planned expenditure Ep as a function of interest rate If r = 5, calculate the equilibrium income If Y = 11000 and r = 5, what is planned investment? What is actual investment? What is unplanned investment or inventory change?
Homework Answers
Consider the following economy C = 0.85 (Y – T) + Ca ; Ca = 600 – 25 R ; T = 450 + 0.225 Y; IP = 1500 – 30 R ; G =1900; NX = 950 – 0.0625 Y. a) What are the values of the autonomous net export NXa and...
Consider the following economy C = 0.85 (Y – T) + Ca ; Ca = 600 – 25 R ; T = 450 + 0.225 Y; IP = 1500 – 30 R ; G =1900; NX = 950 – 0.0625 Y. a) What are the values of the autonomous net export NXa and the autonomous taxes Ta (hint: see the formulas and compare) b) Compute the multiplier c) Derive the equation of the autonomous spending. d) Derive the equation of...
. Consider an economy described by the following equations. Ip = 700 X = 100 T = 1500 Y* = 10000 Cd = 1800 + 0.6(Y-T) G...
. Consider an economy described by the following equations. Ip = 700 X = 100 T = 1500 Y* = 10000 Cd = 1800 + 0.6(Y-T) G = 1500 M = 0 u* = 4 where Cd is consumption on domestically produced goods, G is government expenditure, M is imports, u* is the natural rate of unemployment, P is planned investment spending, X is exports, T is tax revenue and Pis potential output. Derive the equation for planned aggregate expenditure...
An economy is described by the following equations: C= 1800 +0.6(Y-T) consumption function Ip = 900...
An economy is described by the following equations: C= 1800 +0.6(Y-T) consumption function Ip = 900 planned investment G=1500 government spending NX = 100 net exports T= 1500 taxes Y* = 9000 potential output What is the output gap for this economy? If the natural rate of unemployment is 4 percent, what is the actual unemployment rate for this economy (use Okun's law)?
ASSIGNMENT # 3 Actual aggregate expenditure or output (Y) (billions of $) Consumption (C) (billions of...
ASSIGNMENT # 3 Actual aggregate expenditure or output (Y) (billions of $) Consumption (C) (billions of $) Planned investment (billions of $) Government spending (G) (billions of $) Net exports (NX) (billions of $) Unplanned investment (inventory change) (billions of $) 500 300 150 100 50 600 350 700 400 800 450 900 500 For the table shown, answer the following questions: For each level of actual aggregate expenditure, calculate unplanned inventory investment. What is the equilibrium level of aggregate...
6. An open economy is described by the following equations C = 1000 + 0.6(Y-T) I 20, 000 200r G 5...
Answer the question (c)
6. An open economy is described by the following equations C = 1000 + 0.6(Y-T) I 20, 000 200r G 5000 T = 5000 MD MS = 60.000 CA = NX = 2000-0.1Y-1000e KA = 5500+ 2(r-r") r"--10 (a) Derive the IS curve (Y as a function of r and e), LM curve (Y as a function of r) and the BP curve (r as a function of Y, e, and the capital mobility parameter z)...
Question #1 (10 Marks) 500 1000 1500 2000 2500 3000 3500 200 650 1100 1550 2000...
Question #1 (10 Marks) 500 1000 1500 2000 2500 3000 3500 200 650 1100 1550 2000 2450 2900 3350 100 100 100 100 100 100 100 1005001600 250 500 500 500 500 500 500 500 1400 50 200 1000 400 125 600 S0 8001O 1000 2000 1200 8SD 400 400 400 Complete the Total Planned Expenditure (AE) column for all levels of income (Y) on the above table. a) What is the consumption function? Complete the equation. C- 200 b)...
Consider an economy in which taxes, planned investment, government spending on goods and services, and net...
Consider an economy in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate changes. You are given the following information concerning autonomous consumption, the marginal propensity to consume, planned investment, government purchases of goods and services, and net exports: Ca = 1,500 – 10r; c = 0.6; Ta = 1,800; Ip = 2,400 – 50r; G = 2,000; NX = -200 (a)Derive Ep and...
Question 2 In the Keynesian cross, assume that the consumption function is given by C = 150 +0.7 (Y-T) Planned inve...
Question 2 In the Keynesian cross, assume that the consumption function is given by C = 150 +0.7 (Y-T) Planned investment is: I = 100 - 10 *r Government purchases and taxes are both 50. a. Graph consumption as function of income. b.Graph investment as function of the real interest rate. c.Suppose that the real interest rate is 5. Write the equation of the planned expenditure. d.Suppose that the real interest rate is 5. What is the equilibrium level of...
13. Suppose that the economy of Wonderland is described by the following equations: 1. ii. Planned...
13. Suppose that the economy of Wonderland is described by the following equations: 1. ii. Planned consumption: Planned investment: Planned government expenditure: Planned net export: Income taxes: vi. Inflation rate: vii. Nominal interest rate: (Note: r is the real interest rate) C = 1600+0.6(Y-T) I= 2500-1000r G= 2000 NX = 130 T= 2000 n = 0.01 i = 0.04 a. What is the short-run equilibrium output for Wonderland? Please show your calculation. b. Briefly explain how the central bank of...
An economy is described by the following equation Cd=14400+0.5(Y-T)-40000r, Ip=8000-20000r, G=7800, NX=1800, T=8000 a) Find the...
An economy is described by the following equation Cd=14400+0.5(Y-T)-40000r, Ip=8000-20000r, G=7800, NX=1800, T=8000 a) Find the numerical equation relating planned aggregate expenditure (PAE) to output (Y) and to real interest rate (r). b) The real interest rate is 0.133, find short-run equilibrium output. c) Potential output, y*, equals 40,000. What real interest rate should be Reserve Bank set to bring the economy to full employment?
An economy is described by the following equations: C= 1800 +0.6(Y-T) consumption function Ip = 900 planned investment G=1500 government spending NX = 100 net exports T= 1500 taxes Y* = 9000 potential output What is the output gap for this economy? If the natural rate of unemployment is 4 percent, what is the actual unemployment rate for this economy (use Okun's law)?
Answer the question (c)
6. An open economy is described by the following equations C = 1000 + 0.6(Y-T) I 20, 000 200r G 5000 T = 5000 MD MS = 60.000 CA = NX = 2000-0.1Y-1000e KA = 5500+ 2(r-r") r"--10 (a) Derive the IS curve (Y as a function of r and e), LM curve (Y as a function of r) and the BP curve (r as a function of Y, e, and the capital mobility parameter z)...
Question #1 (10 Marks) 500 1000 1500 2000 2500 3000 3500 200 650 1100 1550 2000 2450 2900 3350 100 100 100 100 100 100 100 1005001600 250 500 500 500 500 500 500 500 1400 50 200 1000 400 125 600 S0 8001O 1000 2000 1200 8SD 400 400 400 Complete the Total Planned Expenditure (AE) column for all levels of income (Y) on the above table. a) What is the consumption function? Complete the equation. C- 200 b)...
Question 2 In the Keynesian cross, assume that the consumption function is given by C = 150 +0.7 (Y-T) Planned investment is: I = 100 - 10 *r Government purchases and taxes are both 50. a. Graph consumption as function of income. b.Graph investment as function of the real interest rate. c.Suppose that the real interest rate is 5. Write the equation of the planned expenditure. d.Suppose that the real interest rate is 5. What is the equilibrium level of...
13. Suppose that the economy of Wonderland is described by the following equations: 1. ii. Planned consumption: Planned investment: Planned government expenditure: Planned net export: Income taxes: vi. Inflation rate: vii. Nominal interest rate: (Note: r is the real interest rate) C = 1600+0.6(Y-T) I= 2500-1000r G= 2000 NX = 130 T= 2000 n = 0.01 i = 0.04 a. What is the short-run equilibrium output for Wonderland? Please show your calculation. b. Briefly explain how the central bank of...
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