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Macroeconomics, Problem Set #3 Due: Friday, October 26, 2017 The questions below are due at the...
21. G increase with algebra. Consider an economy described by the following model. Y = K1/3L2/3 K = 1000; L = 1000 G = 100 T = 100 C = 250 + 0.5(Y-T) 1 = 600 – 100r Calculate the equilibrium real interest rate, national saving, public saving, private saving, consumption, output, and investment. (Hint: you probably don't want to solve for them it in that order.) i.rs ii. national saving = iii. public saving = iv. private saving =...
Consider an economy described as follows: Y = C + I + G Y = 8,000 G = 2,500 T = 2,000 C = 1,000 + 2/3(Y - T) I = 1,200 – 100r a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. c. Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate.
Economists in Funlandia, which has a closed economy, have collected the following information about the economy for a particular year:YY = = 12,50012,500CC = = 9,0009,000TT = = 2,1002,100GG = = 2,2002,200The economists also estimate that the investment function is:II = = 2,000−100r2,000−100rwhere rr is the country’s real interest rate, expressed as a percentage.Complete the following table by calculating private saving, public saving, national saving, investment, and the equilibrium real interest rate.ComponentAmountPrivate Saving1,400Public Saving-100National Saving1,300Investment1,300Equilibrium Real Interest Rate7%
We assume that the relationships in the text below describe an economy. It is a closed economy with a given (fixed) price-level and with a variable interest rate (the interest rate is given with a whole value ex. 10% is 10 and not 0,1). C = 425 + 0,4 YD T = 100 G = 140 I = 100 + 0,1 Y – 50r MD = L(r;Y) = Y – 100r MS M/P = 200 YD = (Y-T) Find the...
Gregory Mankiw, Macroecomomics (10th) Chapter 3: Problems and Applications #8, 10, 11 8. The government raises taxes by $100 billion. If the marginal propensity to consume is 0.6, what happens to the following? Do they rise or fall? By what amounts? a. Public saving b. Private saving c. National saving d. Investment 10. Work It Out Consider an economy described as follows: Y 8,000 G 2,500 T= 2,000 C 1,000 +2/3 (Y-T) 1 = 1,200-100 r. a. In this economy,...
Y=C+I+G.Y=8,000.G=2,500.T=2,000.C=1,000+2/3 (Y-T).I=1,200-100 r. = C+I+G = 8,000. G = 2,500. T = 2,000. C = 1,000+2/3 (Y – T'). I = 1,200 - 100 r. a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. C. Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate.
Question 3 Consider a closed economy described by the following equations: Y=C+I+G Y-5,000 G 1,000 T= 1,000 C 250+0.75 (Y -T) 1,000-50 a. (3 points) In this economy, compute private saving, public saving, and national saving. b. (2 points) Find the equilibrium interest rate. c. (2 points) Draw a graph containing the saving and investment curves for this economy Show the financial market equilibrium. d. (2 points) Now suppose the G rises to 1,250. Compute private saving, public saving, and...
1. Given the following data, answer all questions Y 5000 G-1000 T 1000 C-250+0.75 (Y-T 1000-50 a. Calculate: Consumption Private Saving Public Saving- National Saving Investment- b. Calculate the equilibrium interest rate:r c. Assume G increases to 1,250. Calculate: Consumption Private Saving- Public Saving National Saving- d. Calculate the new equilibrium interest rate: Now open the economy to NX: NX 500-500 E Investment- e. Calculate: Consumption Private Saving = Public Saving- National Saving Investment- The trade balance- Equilibrium exchange rate-...
Question 3 Consider a closed economy described by the following equations: Y-C+1+G Y -5,000 G- 1,000 T= 1,000 C 2500.75 (Y T) I 1,000-50*r (3 points) In this economy, compute private saving, public saving, and national saving. (2 points) Find the equilibrium interest rate. (2 points) Draw a graph containing the saving and investment curves for this economy. a. b. c. Show the financial market equilibrium d. (2 points) Now suppose the G rises to 1,250. Compute private saving, public...
In the classic model given the following: Production function: Y=3 K^.5 L^.5 Labor (L) is 400 units Capital (K) is 100 units Taxes (T) are 200 Government Spending (G) is 100 Marginal Propensity to Consume is .6 Investment is determined by the following function: I(r) = 1000- 100r where r is real interest rate. 1. a) If Government spending increases to 150, Investment and Savings and the interest rate will change. By how much? b) Output, Taxes and Consumption will...