In a certain economy, the components of planned spending are given by: C = 500 + 0.8(Y - T) - 300r Ip = 200 - 400r G = 200 NX = 10 T = 150 Given the information about the economy above, what would be the impact on autonomous expenditures of a one-percentage-point increase in the real interest rate?
In a certain economy, the components of planned spending are given by: C = 500 +...
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...
Planned spending is as follows: c 16 Planned spending s as follows: C = 600 + 0 7(Y-T)一200, P the following also states PAE? 200-500, G 200, NX-10 and T-1 50 which of A [905-7001 0.3Y B. 1905-700r C. 1910-700r] D. 1905-7001+07Y 17 The Fed would like to close a recessionary gap. To do this real interest rates must T This is accomplished by the money supply A increase; increasing B. increase, decreasing C. decrease, decreasing D. decrease; increasing 18....
Consumption spending in a country is represented by C = 1800+ 0.8(Y-T ). Planned investment is 900, government purchases G = 0, net exports NX = 100 and T = 0.2Y. Write down planned aggregate spending of the economy as a function of Y. Zero points if you do not show your work. (3) An important trading partner of the country goes through a major recession, decreasing the country’s net exports by $500. Use the Keynesian AE model to analyze...
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...
Consumption spending in a country is represented by C = 1800+ 0.8(Y-T). Planned investment is 900, government purchases G = 0, net exports NX = 100 and T = 0.2Y. 1. Write down planned aggregate spending of the economy as a function of Y. Zero points if you do not show your work. (3) 2. An important trading partner of the country goes through a major recession, decreasing the country's net exports by $500. Ure the Keynesian AE model to...
Suppose that the following equations govern planned spending in the US: C = 500 + 0.75(Y-T) T = 0.2Y – 800 I = 3000 – 64000r G = 3200 NX = 1000 – 10e (e =“trade weighted” real ex. rate. As always, increase in e = $ appreciation) NFO = 500 – 60000(r – r FOR) r FOR = 3% a) Explain how NFO responds to an increase in the Home interest rate, and an increase r FOR, based on...
Problem 4 Consider the following economy: Consumption Expenditure 446,832 million Planned Investment Expenditure 346,877 million Government Expenditure 446,832 million Exports 402,443 million Imports 388,374 million Marginal Propensity to Save 0.3 Marginal Tax Rate 0.32 Autonomous Taxes 301,240 million Marginal Propensity to Import (nx) 0.04 (a) Calculate the equilibrium level of income. (0.5 mark) (b) Calculate autonomous consumption. (0.5 mark) (c) Calculate autonomous net exports. (0.5 mark) (d) Calculate autonomous planned expenditures. (0.5 mark) (e) Calculate the marginal leakage rate. (0.5 mark) (f) Assume that the...
QUESTION 20 Scenario: Income-Expenditure Equilibrium GDP is $8,000, autonomous consumption is $500, and planned investment spending is $200. The marginal propensity to consume is 0.8. (Scenario: Income-Expenditure Equilibrium) Income-expenditure equilibrium is achieved when GDP is: A) $8,000. B) $7,000. C) $3,500. D) $700.
UVernmen Alternatively, by how much would the government have to change ta the fall in planned investment t have to change its purchases to re ly to full employment? pose that the government's budget is initially in balance, with ment spending equal to taxes colle government ers could do to not want to violate the balanced-budget law? d Sup cted. A bal nced-budget law for from running a deficit. Is there anything that fiscal pol restore full employment in this...
Suppose that autonomous consumption and planned investment in the economy described in problem 5 change to Ca = 470 − 15r and Ip = 1,700 − 60r. All other aspects of the structure of the commodity and the money markets are as described in problem 5.(a) Derive the equation for the new IS curve and verify that the equilibrium interest rate and real output are the same as you computed in parts 5g and 5h, respectively.(b) Calculate the slope of...