4. Suppose that an economy is given by the following equations C= 100+ 0.8 (Y-T), 1= 20, G=T=10. The full employment level of output of the economy is Yp=600 1) By how much will the govemment have to change its expenditure to achieve full employment equil
4. Suppose that an economy is given by the following equations C= 100+ 0.8 (Y-T), 1= 20, G=T=10. The full employment level of output of the economy is Yp=600 1) By how much will the govemment have to change its expenditure to achieve full employment equilibrium? 11) If the government wants to achieve the same target by changing the level of lump sum tax, then by how much will it have to change T? iii) By how much will the government have to change its expenditure to achieve full employment equilibrium when government expenditure is financed by levying lump sum tax of the same amount? iv) Derive the equation and slope of the IS -curve when in the above model T
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4. Suppose that an economy is given by the following equations C= 100+ 0.8 (Y-T), 1= 20, G=T=10. The full employment level of output of the economy is Yp=600 1) By how much will the govemment have to change its expenditure to achieve full employment equil
19. Consider a closed economy where the consumption function is C = 100+ 0.8(Y – T),...
19. Consider a closed economy where the consumption function is C = 100+ 0.8(Y – T), where T represents lump sum taxes. Investment is fixed at 100, and government spending is also 100. a. Assuming that the budget is balanced, calculate the equilibrium income for this economy. b. Suppose the government is committed to a balanced budget, but it sees that the economy is overheating (growing too fast). It decides to lower both government spending and taxes by 50 each....
Planned expenditure function question with lump-sum tax
Planned expenditure function question with lump-sum taxDo all parts to the question (show your work)Assume in Fantasticland, MPC = 0.75, and autonomous consumption = $6000. Planned investment = $2000, and planned government purchases = $5000. All Planned I and G are autonomous expenditures. Taxes ( T) is = $1000, and net exports = zero.a. Write out the consumption functionb. What is induced consumption in this model?c.Write out the planned expenditure function (show your work)d. Calculate current equilibrium real...
2. An economy is described by the following equations C 40 + 0.8(Y-7) P 70 G-...
2. An economy is described by the following equations C 40 + 0.8(Y-7) P 70 G- 120 T 150 The multiplier in this economy is 5.(LO4. LO5) a Find a numerical equation relating planned aggregate expenditure to output b Construct a table to find the value of short-run equilibrium output. (Hint: The economy is fairly close to full employment) c By how much would government purchases have to change in order to eliminate any output gap? By how much would...
QUESTION 1 Suppose that the behavior of households, firms and the government in an economy is...
QUESTION 1 Suppose that the behavior of households, firms and the government in an economy is determined by the following equations: C-180+0.75Y 1150 G-55 T-90 TWR30 The full employment level of output in the economy is: YFE 1200 Find an expression for aggregate expenditure (This should take the form of AE - abY, where a and b are numbers) il. What is the equilibrium level of output? YE = ill. What is the government spending multiplier in this economy? iv....
1. Suppose you are given the following information about Japan's economy: C = 150 + 0.8(Y-T)...
1. Suppose you are given the following information about Japan's economy: C = 150 + 0.8(Y-T) T = 0 Iplanned = 300 NX = 50 G = 200 a) Set up the aggregate planned expenditure function for Japan. (Write down the equation). b) Graph the aggregate expenditure function, using the diagram below. Be sure to label you graph. Carefully indicate the intercept. What is the slope of the line? c) Calculate equilibrium Real GDP (Y). d) Indicate the equilibrium on...
An open economy is described by the following system of macroeconomic equations, in which all macroeconomic...
An open economy is described by the following system of macroeconomic equations, in which all macroeconomic aggregate are measured in billions of Namibian dollars, N$: Y = C + I + G + X – M C = 10 + 0.8 Yd T = 10+ 0.2Y X = 80 I = 35 G = 15 TR = 10 – 0.05Y M = 22 + 0.1Y Where: Y is domestic income Yd is private disposable income C is...
B,c,d,e please solve Suppose in the economy autonomous consumption - $100, autonomous investmen $120, government purchases...
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...
5 to 10 We have the following model of the economy () Y-C+S+T (2) E CI+G...
5 to 10
We have the following model of the economy () Y-C+S+T (2) E CI+G G-GA (8) T-TA 9) YD -Y - T (10) Defict G-T (4) C-(YD CA) (5) S=s(YD-SA) (6) I IA The following data for equilibrium values will help in this problem G= 80 300 S 450 T 650 Calculate 1. the equilibrium value of consumption 2. marginal propensity to consume (AC/AY) 3. the expenditure multiplier MPC t budget now has an imbalance of . This...
KEYNESIAN MACROECONOMICS ( THE ROLE OF AGGREGATE DEMAND Derive and compare the mutipliers for two-secto...
KEYNESIAN MACROECONOMICS ( THE ROLE OF AGGREGATE DEMAND Derive and compare the mutipliers for two-sector, three sector and four-sector economies Assume a 2 Suppose that for a particular economy C 2500 T-2500 G 2500 3000 a) Determine the equlbrium income and show it graphicaly Detemine thegovemment budget b) Has the economy achieved ful employment equilibrium income a employment is 350007 Whr )taxes are reduced? What is the new budget and the new funcion forax Show the outcomes graphically C- 200...
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....
19. Consider a closed economy where the consumption function is C = 100+ 0.8(Y – T), where T represents lump sum taxes. Investment is fixed at 100, and government spending is also 100. a. Assuming that the budget is balanced, calculate the equilibrium income for this economy. b. Suppose the government is committed to a balanced budget, but it sees that the economy is overheating (growing too fast). It decides to lower both government spending and taxes by 50 each....
2. An economy is described by the following equations C 40 + 0.8(Y-7) P 70 G- 120 T 150 The multiplier in this economy is 5.(LO4. LO5) a Find a numerical equation relating planned aggregate expenditure to output b Construct a table to find the value of short-run equilibrium output. (Hint: The economy is fairly close to full employment) c By how much would government purchases have to change in order to eliminate any output gap? By how much would...
QUESTION 1 Suppose that the behavior of households, firms and the government in an economy is determined by the following equations: C-180+0.75Y 1150 G-55 T-90 TWR30 The full employment level of output in the economy is: YFE 1200 Find an expression for aggregate expenditure (This should take the form of AE - abY, where a and b are numbers) il. What is the equilibrium level of output? YE = ill. What is the government spending multiplier in this economy? iv....
1. Suppose you are given the following information about Japan's economy: C = 150 + 0.8(Y-T) T = 0 Iplanned = 300 NX = 50 G = 200 a) Set up the aggregate planned expenditure function for Japan. (Write down the equation). b) Graph the aggregate expenditure function, using the diagram below. Be sure to label you graph. Carefully indicate the intercept. What is the slope of the line? c) Calculate equilibrium Real GDP (Y). d) Indicate the equilibrium on...
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...
5 to 10
We have the following model of the economy () Y-C+S+T (2) E CI+G G-GA (8) T-TA 9) YD -Y - T (10) Defict G-T (4) C-(YD CA) (5) S=s(YD-SA) (6) I IA The following data for equilibrium values will help in this problem G= 80 300 S 450 T 650 Calculate 1. the equilibrium value of consumption 2. marginal propensity to consume (AC/AY) 3. the expenditure multiplier MPC t budget now has an imbalance of . This...
KEYNESIAN MACROECONOMICS ( THE ROLE OF AGGREGATE DEMAND Derive and compare the mutipliers for two-sector, three sector and four-sector economies Assume a 2 Suppose that for a particular economy C 2500 T-2500 G 2500 3000 a) Determine the equlbrium income and show it graphicaly Detemine thegovemment budget b) Has the economy achieved ful employment equilibrium income a employment is 350007 Whr )taxes are reduced? What is the new budget and the new funcion forax Show the outcomes graphically C- 200...
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....
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