1. The economy has 8 million units of capital and 8 million units of labor. The...
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1. The economy has 8 million units of capital and 8 million
units of labor. The...
For a hypothetical economy, suppose the consumption equation is C = 30 + 0.65Y, where C...
For a hypothetical economy, suppose the consumption equation is C = 30 + 0.65Y, where C is households’ consumption and Y is disposable income. If the disposable income is $600, carefully show your steps and calculate: The levels of (i) consumption and (ii) saving. The marginal propensity to (i) consume and (ii) save. The average propensity to (i) consume and (ii) save. Interpret your estimates in (c).
6. Suppose the economy is characterized by the following behavioral equations: C = 1,500+.6YD I= 2.000...
6. Suppose the economy is characterized by the following behavioral equations: C = 1,500+.6YD I= 2.000 - 10,000 G= 2,000 T= 2.000 a. At an interest rate of 10%, solve for equilibrium income (Y). disposable income (Y). consumption (C), investment (1), private saving, and public saving. b. What is the marginal propensity to consume in this economy? c. Now suppose that instead of taxes being a fixed quantity, taxes vary with income (as in many countries like the United States)...
Aggregate expenditure is total value added in the economy income of households, businesses, governments, and foreigners....
Aggregate expenditure is total value added in the economy income of households, businesses, governments, and foreigners. revenue from the sale of goods and services. spending on final goods and services. The MPC can be defined as the change in consumption divided by the change in income. change in income divided by the change in consumption. ratio of income to saving. ratio of saving to consumption. The relationship between the MPS and the MPC is such that MPC - MPS =...
An economy has a Cobb-Douglas production function: Y = K"(LE)!-a The economy has a capital share...
An economy has a Cobb-Douglas production function: Y = K"(LE)!-a The economy has a capital share of 0.25, a saving rate of 40 percent, a depreciation rate of 3.00 percent, a rate of population growth of 0.75 percent, and a rate of labor- augmenting technological change of 2.0 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital.
An economy has a Cobb-Douglas production function: Y = Ka(LE)(1-a). The economy has a capital share...
An economy has a Cobb-Douglas production function: Y = Ka(LE)(1-a). The economy has a capital share of a third (means a= 1/3), a saving rate of 24 percent, a depreciation rate of 3 percent, and a rate of labor-augmenting technological change of 1 percent. It is in steady state. a. At what rate does total output, output per worker, and output per effective worker grow? b. Solve for steady state capital per effective worker, output per effective worker, consumption per...
The table shows disposable income and saving in an economy. Saving Calculate the marginal propensity to...
The table shows disposable income and saving in an economy. Saving Calculate the marginal propensity to consume. >>> Answer to 1 decimal place. Disposable income (trillions of dollars) 0 10 20 30 40 50 The marginal propensity to consume is - 15 - 13 - 11 -9 -7 -5 If wealth increases by $10 trillion, the consumption function O A. shifts upward OB. shifts downward O C. does not change
Income and Expenditure - End of Chapter Problems Individual current disposable income 3. Economists observed the...
Income and Expenditure - End of Chapter Problems Individual current disposable income 3. Economists observed the only five residents of a very small economy and estimated each one's consumer spending at various levels of current disposable income. The accompanying table shows each resident's consumer spending at three income levels. Individual consumer spending by $0 $40,000 $29,000 Andre $1,000 Barbara 2,500 22,500 $20,000 $15,000 12,500 20,000 17.000 19,000 Casey Declan 2,000 5,000 4,000 38,000 29,000 34,000 Elena a. What is the...
QUESTION TWO An economy is represented by the following set of equations: Y = C +...
QUESTION TWO An economy is
represented by the following set of equations: Y = C + I C = 80m +
1.6Y where Y represents aggregate expenditure C represents
consumption expenditure by households I represents investment
expenditure by firms M is millions of Ghana cedis (a) (i) Explain
why the model is not an open economy? (2 marks) (ii) Explain
investment expenditure (I) as used in the model. (3 marks) (b)
Using the consumption function, estimate the autonomous
consumption; marginal...
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal to
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal toa. Consumptionb. Consumption + Investmentc. Consumption + Investment + Govemmentd. Consumption + Investment + Net Exports2. The calculation 1 /(1-MPC) equalsa. Marginal Propensity to Saveb. Multiplierc. Aggregate Expenditured. Average Consumption3. In a closed economy, when Aggregate Expenditures equal GDP.a. Consumption equals investmentb. Consumption equals aggregate expenditurec. Saving = Planned Investmentd. Disposable income equals consumption minus saving4. Net exports are calculated asa. Importsb. Imports - Exportsc. Exports -...
Macroeconomics Assignment 2 1. The table shows disposable income and consumption expenditure in an economy. Use...
Macroeconomics Assignment 2 1. The table shows disposable income and consumption expenditure in an economy. Use the table to work Problems A and B. Disposable Consumption income expenditure (Billions of dollars) 800 1,000 A. Calculate saving at each level of disposable income. Over what range of disposable income does consumption expenditure exceed disposable income? Calculate autonomous consumption expenditure. B. Calculate the marginal propensity to consume. At what level of disposable income will savings be zero? If expected future income increases,...
6. Suppose the economy is characterized by the following behavioral equations: C = 1,500+.6YD I= 2.000 - 10,000 G= 2,000 T= 2.000 a. At an interest rate of 10%, solve for equilibrium income (Y). disposable income (Y). consumption (C), investment (1), private saving, and public saving. b. What is the marginal propensity to consume in this economy? c. Now suppose that instead of taxes being a fixed quantity, taxes vary with income (as in many countries like the United States)...
An economy has a Cobb-Douglas production function: Y = K"(LE)!-a The economy has a capital share of 0.25, a saving rate of 40 percent, a depreciation rate of 3.00 percent, a rate of population growth of 0.75 percent, and a rate of labor- augmenting technological change of 2.0 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital.
The table shows disposable income and saving in an economy. Saving Calculate the marginal propensity to consume. >>> Answer to 1 decimal place. Disposable income (trillions of dollars) 0 10 20 30 40 50 The marginal propensity to consume is - 15 - 13 - 11 -9 -7 -5 If wealth increases by $10 trillion, the consumption function O A. shifts upward OB. shifts downward O C. does not change
Income and Expenditure - End of Chapter Problems Individual current disposable income 3. Economists observed the only five residents of a very small economy and estimated each one's consumer spending at various levels of current disposable income. The accompanying table shows each resident's consumer spending at three income levels. Individual consumer spending by $0 $40,000 $29,000 Andre $1,000 Barbara 2,500 22,500 $20,000 $15,000 12,500 20,000 17.000 19,000 Casey Declan 2,000 5,000 4,000 38,000 29,000 34,000 Elena a. What is the...
QUESTION TWO An economy is
represented by the following set of equations: Y = C + I C = 80m +
1.6Y where Y represents aggregate expenditure C represents
consumption expenditure by households I represents investment
expenditure by firms M is millions of Ghana cedis (a) (i) Explain
why the model is not an open economy? (2 marks) (ii) Explain
investment expenditure (I) as used in the model. (3 marks) (b)
Using the consumption function, estimate the autonomous
consumption; marginal...
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal toa. Consumptionb. Consumption + Investmentc. Consumption + Investment + Govemmentd. Consumption + Investment + Net Exports2. The calculation 1 /(1-MPC) equalsa. Marginal Propensity to Saveb. Multiplierc. Aggregate Expenditured. Average Consumption3. In a closed economy, when Aggregate Expenditures equal GDP.a. Consumption equals investmentb. Consumption equals aggregate expenditurec. Saving = Planned Investmentd. Disposable income equals consumption minus saving4. Net exports are calculated asa. Importsb. Imports - Exportsc. Exports -...
Macroeconomics Assignment 2 1. The table shows disposable income and consumption expenditure in an economy. Use the table to work Problems A and B. Disposable Consumption income expenditure (Billions of dollars) 800 1,000 A. Calculate saving at each level of disposable income. Over what range of disposable income does consumption expenditure exceed disposable income? Calculate autonomous consumption expenditure. B. Calculate the marginal propensity to consume. At what level of disposable income will savings be zero? If expected future income increases,...
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