1. Consider a closed economy with the following partcipants: households, rental firm, production firm and the...
1.
Consider a closed economy with the following partcipants: households, rental firm, production firm and the government: (a)Total Production: Y = 10000. (b ) Consumption is given by: C = 7200 − 100r where C is consumption and T is tax. (c) Firm: Investment I is given by equation I = 3000 − 100r. (d) Government collect lump-sum tax T=2000 and spend G=3000. Use the condition above to answer the following questions: (E) (15 pts) Solve the equilibrium real interest rate r, the equilibrium consumption C and the equilibrium investiment I. (F) Solve the private saving and the public saving in equilibrium. (G) If the government reduces its spending from 3000 to 2000, solve the value of the consumption and investment. Compare your answer with your answers to the previous questions, whether reducing government spending increases investment and consumption or not? Explain narratively why reducing government spending changes the investment and consumption.
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Consider a closed economy with the following partcipants:
households, rental firm, production firm and the...
Question 1. Consider a closed economy to which the Keynesian-cross analysis applies. Consumption is given by...
Question 1. Consider a closed economy to which the Keynesian-cross analysis applies. Consumption is given by the equation C= 200 + 2/3(Y-T). Planned investment is 300, as are government spending and taxes. (18 points) a. If Y is 1,500, what is planned spending? Should equilibrium Y be higher or lower than 1,500? (4 points) b. What is equilibrium Y? (Hint: Substitute the values of equations for planned consumption, investment, and government spending into the equation Y C+I+ G and then...
1.Consider a closed economy with no taxes, whose consumption function, investment level & government spending level...
1.Consider a closed economy with no taxes, whose consumption function, investment level & government spending level are given by the following equations: C= 5,000 + .80Y I= 9,000 G= 2000 whereGrepresents government spending. The equilibrium condition is, as always, that the value of the economy’s output (Y) must be matched by aggregate demand, but now aggregate demand contains a third element, G. a. What is the equilibrium level of aggregate output for this economy? b. What is the saving function for this...
Closed Economy In the Short Run. I have solved (a) but confused on how to solve...
Closed Economy In the Short
Run. I have solved (a) but confused on how to solve the rest.
I-MPC sider the following model of a closed economy in the short run Total demand is given by the accounting identity I MPC Y =C+I+G The consumption function is C = ao + a (Y +TT - TT) - MPC The tax schedule is Tx = To + TY Transfers are given by Th = Tro – hY Investment demand is I=bo-bzi...
sing and government purchases are leakages. 8. In a mixed closed economy: A taxes and government...
sing and government purchases are leakages. 8. In a mixed closed economy: A taxes and government purchases are leakages, while investment and saving are injections. • taxes and investment are injections, while saving and government purchases are leakages. taxes and savings are leakages, while investment and government purchases are injections. 1. government purchases and saving are injections, while investment and taxes are leakages. 9. In a mixed open economy, the equilibrium GDP is determined at that point where: A.S. +M+...
Short Answer Questions 1 Assume thatGDP (nis 6,000. Consumption (C) isgiven by the equation d=600 T)....
Short Answer Questions 1 Assume thatGDP (nis 6,000. Consumption (C) isgiven by the equation d=600 T). Investment rhisgi +0.60 equation / 2,000- 100r, where r is the real rate of interest in percent. Taxes (T) are 500 and government spending G) is also 500. a. What are the equilibrium values of C, I, and r? b. What are the values of private saving, public saving, and national saving? c. If government spending rises to 1,000, what are the new equilibrium...
The income identity for a closed economy says that Y-C+I+G Assume that in the Economy of...
The income identity for a closed economy says that Y-C+I+G Assume that in the Economy of Berkeley GDP (Y) is equal to 6,000 and consumption (C) is given by the equation C 600+0.6(Y - T). In addition, investment (I) is given by the equation 1 2, 000-100r where r is the real of interest rate in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C, I, and r?
The income identity for a closed economy says that Y = C+I+G Assume that in the...
The income identity for a closed economy says that Y = C+I+G Assume that in the Economy of Berkeley GDP (Y) is equal to 6,000 and consumption (C) is given by the equation: C = 600 + 0.6(Y-T) In addition, investment (I) is given by the equation I = 2,000 - 100r where r is the real of interest rate in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C,...
6) Consider a closed economy described by the following equations: (1) Y=C+I+G (2) Y = 5(K)S(L)05...
6) Consider a closed economy described by the following equations: (1) Y=C+I+G (2) Y = 5(K)S(L)05 (3) K = 1600 (4) L = 1600 (5) G = 2500 (6) T = 2000 (7) C = 1000 + 2/3 (Y-T) (8) I= 1200 - 100r, where r is the real interest rate. a) What is the equilibrium level of income? Show your work. b) Solve for the equilibrium interest rate (r) and the level of investment (I). The interest rate will...
worth 9 points The income identity for a closed economy says that Y-C+I+G Assume that in...
worth 9 points
The income identity for a closed economy says that Y-C+I+G Assume that in the Economy of Berkeley GDP (Y) is equal to 6,000 and consumption (C) is given by the equation C-600+0.6(Y - T). In addition, investment (I) is given by the equation I-2,000 100r where r is the real of interest rate in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C, I, and r?
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....
Question 1. Consider a closed economy to which the Keynesian-cross analysis applies. Consumption is given by the equation C= 200 + 2/3(Y-T). Planned investment is 300, as are government spending and taxes. (18 points) a. If Y is 1,500, what is planned spending? Should equilibrium Y be higher or lower than 1,500? (4 points) b. What is equilibrium Y? (Hint: Substitute the values of equations for planned consumption, investment, and government spending into the equation Y C+I+ G and then...
Closed Economy In the Short
Run. I have solved (a) but confused on how to solve the rest.
I-MPC sider the following model of a closed economy in the short run Total demand is given by the accounting identity I MPC Y =C+I+G The consumption function is C = ao + a (Y +TT - TT) - MPC The tax schedule is Tx = To + TY Transfers are given by Th = Tro – hY Investment demand is I=bo-bzi...
sing and government purchases are leakages. 8. In a mixed closed economy: A taxes and government purchases are leakages, while investment and saving are injections. • taxes and investment are injections, while saving and government purchases are leakages. taxes and savings are leakages, while investment and government purchases are injections. 1. government purchases and saving are injections, while investment and taxes are leakages. 9. In a mixed open economy, the equilibrium GDP is determined at that point where: A.S. +M+...
Short Answer Questions 1 Assume thatGDP (nis 6,000. Consumption (C) isgiven by the equation d=600 T). Investment rhisgi +0.60 equation / 2,000- 100r, where r is the real rate of interest in percent. Taxes (T) are 500 and government spending G) is also 500. a. What are the equilibrium values of C, I, and r? b. What are the values of private saving, public saving, and national saving? c. If government spending rises to 1,000, what are the new equilibrium...
The income identity for a closed economy says that Y-C+I+G Assume that in the Economy of Berkeley GDP (Y) is equal to 6,000 and consumption (C) is given by the equation C 600+0.6(Y - T). In addition, investment (I) is given by the equation 1 2, 000-100r where r is the real of interest rate in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C, I, and r?
6) Consider a closed economy described by the following equations: (1) Y=C+I+G (2) Y = 5(K)S(L)05 (3) K = 1600 (4) L = 1600 (5) G = 2500 (6) T = 2000 (7) C = 1000 + 2/3 (Y-T) (8) I= 1200 - 100r, where r is the real interest rate. a) What is the equilibrium level of income? Show your work. b) Solve for the equilibrium interest rate (r) and the level of investment (I). The interest rate will...
worth 9 points
The income identity for a closed economy says that Y-C+I+G Assume that in the Economy of Berkeley GDP (Y) is equal to 6,000 and consumption (C) is given by the equation C-600+0.6(Y - T). In addition, investment (I) is given by the equation I-2,000 100r where r is the real of interest rate in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C, I, and r?
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....
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