Equilibrium income
Government spending is 700; investment is 310 and consumption is given by
C=259+0.8Yd
Net tax T=-50+0.25Y
I. Cal equilibrium income
Ii. Assume investment falls by 80units,compute new level of equil income and the value of budget deficit/surplus at that level.of income.
Iii. Suppose that government raises lump-sum taxes by the any of deficit /surplus in order to bal the dudget,what will be the new level.of equil income?
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Suppose a government decides to reduce spending and (lump-sum) income taxes by the same amount. Using...
Suppose a government decides to reduce spending and (lump-sum) income taxes by the same amount. Using the long-run model of the economy, graphically illustrate the impact of the equal reductions in spending and taxes. Be sure to label: i. the axes; ii. the curves; iii. the initial equilibrium values; iv. The direction the curves shift; and v. the terminal equilibrium values. b. State in words what happens to: i. the real interest rate; ii. national saving; iii. investment; iv. consumption;...
Assuming that marginal propensity to consume is not zero, and that the balanced budget multiplier is...
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B,c,d,e please solve Suppose in the economy autonomous consumption - $100, autonomous investmen $120, government purchases...
B,c,d,e please solve
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In Japan, taxes and real imports do not depend on real income. Autonomous real consumption is ¥400 million, lump-sum taxes (taxes that do not depend on real income) are ¥100 million, investment spendi...
In Japan, taxes and real
imports do not depend on real income. Autonomous real consumption
is ¥400 million, lump-sum taxes (taxes that do not depend on real
income) are ¥100 million, investment spending is ¥300 million,
Japanese government spending is ¥100, and real net exports are ¥0,
The Japanese Marginal Propensity to Consume is 0.60. a. Solve for
the equilibrium level of Japanese real GDP. b. Suppose that more
foreign investors begin to buy Japanese stocks on the Tokyo Stock...
h) Suppose taxes are cut to .18Y. What would happen to the equilibrium level of income...
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Problem 3. The Crowding Out Effect. In a closed economy, the consumption function is C =...
Problem 3. The Crowding Out Effect. In a closed economy, the consumption function is C = 80+ 0.8YD – 20r, where Yd is disposable income, taxes Tx = 200 and transfers are Tr = 100. The investment function is I = 550 – 130r. Output is Y = 1000. Here the real interest rate is measured in percentage points (e.g. for r = 5% use 5 and not 0.05). (A) Find net taxes T and government spending G if the...
Which of the following statements about taxation is incorrect? A change in taxes does not affect...
Which of the following statements about taxation is incorrect? A change in taxes does not affect consumption. An increase in taxes decreases income and expenditures. A tax cut raises income and expenditures. Cutting taxes by $20 is not the same as increasing government spending by $20. A tax cut affects aggregate demand indirectly. The sum of the unemployment rate and the inflation rate is known as: the mortality rate. the misery index. a coincident indicator. the macroeconomic index. the market...
A5-10. Suppose the following aggregate expenditure model describes an economy: C = 100 + (5/6)Yd T...
A5-10. Suppose the following aggregate expenditure model describes an economy: C = 100 + (5/6)Yd T = (1/5)Y 1 = 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 of national income....
Assuming that marginal propensity to consume is not zero, and that the balanced budget multiplier is positive, a decrease in lump-sum personal income taxes will most likely result in an increase in real GDP because which of the following must occur? I. Government spending decreases to maintain a balanced budget. II. Consumption spending increases because disposable personal income increases III. Investment spending decreases because disposable personal income increases O I only III only II only 0 I and III only
B,c,d,e please solve
Suppose in the economy autonomous consumption - $100, autonomous investmen $120, government purchases G-$400 lump-sum taxes = $70, transfers Tr-$20, exports Er $150 autonomous imports im = $30, marginal propensity to consume mpc = 0.8, proportional income tax rate 1-20%, marginal propensity to invest mpi-0.1, and marginal propensity to imports mpm-0.4 (a) For this economy calculate (i) the amount of autonomous spending: (ii) the value of the spending multiplier; (iii) the equilibrium level of output; (iv) the...
In Japan, taxes and real
imports do not depend on real income. Autonomous real consumption
is ¥400 million, lump-sum taxes (taxes that do not depend on real
income) are ¥100 million, investment spending is ¥300 million,
Japanese government spending is ¥100, and real net exports are ¥0,
The Japanese Marginal Propensity to Consume is 0.60. a. Solve for
the equilibrium level of Japanese real GDP. b. Suppose that more
foreign investors begin to buy Japanese stocks on the Tokyo Stock...
h) Suppose taxes are cut to .18Y. What would happen to the equilibrium level of income in this economy (how much would it change)? 4) Suppose that there exists an economy, Macroland, which is characterized by the following behavioral equations C=-340+.9Y I= 2007.14 G = 2200 T= 2Y X = 1100 Q = 300+.1 Yd Ya=Y-T. Note that taxes and investment are based on total income (Y), not on disposable income (Y). a) Find an expenditure function relating expenditures (E)...
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