Homework Answers
16. (C) The Y = C+S+T line would shift to the right and Ye would increase
Reason: An increase in tax would increase Y, thereby shifting the Y curve to the right, leading to an increase in output Ye
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16. Consider the following income/expenditure diagram in the simple Keynesian model. C,1,G, S,T Y = C+S+T -C+1+G I...
21. What is equilibrium income ($output), Ye? a. $10,400 b. $6,800 c. $3,500 d. $5,100 e....
21. What is equilibrium income ($output), Ye? a. $10,400 b. $6,800 c. $3,500 d. $5,100 e. none of the above. 22. If Y,(disposable income) increased by $400, C would a. increase by $380. b. increase by $436. c. decrease by $90. d. increase by $320. e. increase by $360. 23. If both G and T increase by $800, equilibrium Y would a. increase by $1,200. b. increase by $900. c. increase by $720. d. increase by $400. e. none of...
The following information applies to questions 19 - 24. Suppose we have the following information for the simple (fixed...
The following information applies to questions 19 - 24. Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400+ 0.9 YD I = 300 G= 160 T= 200, = 400 +0.9 (Y-T) where C is the consumption function, Y, is disposable income, I is investment, G is government spending, and T is taxes. 19. What is autonomous consumption? a. $400 b. $300 c. $0.80 d. $500 e. none of the...
Consider the following Keynesian income model: E = C + I + G + X-M C...
Consider the following Keynesian income model: E = C + I + G + X-M C = 300 + 0.85Yd Yd = Y – T T = 60 + 0.25Y; I = 400 G = 700 X = 400 M = 50 + 0.15Y In equilibrium, Y = E: a. calculate the equilibrium level of income. b. calculate the amount of taxes collected when the economy is at equilibrium level of income and show whether the government budget is in...
3. Consider the following Keynesian model: C 100 + 0.8 (Y-T) Planned Investment (I) 100 Government...
3. Consider the following Keynesian model: C 100 + 0.8 (Y-T) Planned Investment (I) 100 Government Purchase (G) 50 Taxes (T) = 50 a. Graph planned expenditure (PE) as a function of income (Y) b. What is equilibrium level of income (Y)? c. If government purchase (G) is increases to 50, what is new equilibrium income?
please answer 7,8,9,10. thank you so much!!:)) SECTION In the simple Keynesian model with an MPC...
please answer 7,8,9,10. thank you so much!!:))
SECTION In the simple Keynesian model with an MPC equal Keynesian model with an MPC equal to 0.80, a S50 billion increase in investment spending leads to a maximum: $50 billion increase in equilibrium income. b. 580 billion increase in equilibrium income $250 billion increase in equilibrium income. d. $400 billion increase in equilibrium income S500 billion increase in equilibrium income. when $2.000 increase in income causes a $1,800 increase in consumption spending...
Consider the following numerical example of the simple Keynesian model: C = 420 +.6YD IP =...
Consider the following numerical example of the simple Keynesian model: C = 420 +.6YD IP = 90 G= 100 T= 100 NX = 50 where YD = disposable income (Income minus net taxes) T = net taxes i.e., taxes minus transfers) Assume that all of the above variables are measured in billions of dollars per year, and refer to real variables (i.e. adjusted for any inflation that might be happening). For example, the equation for consumption tells us that real...
2. Assume the following Keynesian model: C = 400 + .75Yd I = 200 G =...
2. Assume the following Keynesian model: C = 400 + .75Yd I = 200 G = 100 X = 150 M = 50 + .15 Yd T = 100 a. Find the aggregate expenditure function b. Find the equilibrium level of GDP. c. Using a “Keynesian cross” (or 45-degree line) diagram, show graphically the equilibrium in part a). d. What is the spending multiplier in this model? Tax multiplier? e. Show that leakages are equal to injections at equilibrium. f....
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....
Assume the following Keynesian model: AE = C + I + G + (X - M)...
Assume the following Keynesian model: AE = C + I + G + (X - M) C = 500 + .9Yd I = 300 G = 100 X = 150 M = 50 + .1 Yd T = 100 a. Find the equilibrium level of GDP. b. Using a “Keynesian cross” (or 45-degree line) diagram, show graphically the equilibrium in part a). c. What is the spending multiplier in this model? Tax multiplier? d. Show that leakages are equal to...
4. Consider the following numerical example of the IS-LM model C 0.8(Y T); I 1520 240i;...
4. Consider the following numerical example of the IS-LM model C 0.8(Y T); I 1520 240i; T 150 0.25Y; G 200; (M/P)s 1800 (M/P)D 300 0.75Y 300i a. Derive the IS and LM relation. (10%) b. Solove for the equilibrium values of output, interest rate, disposable income.(10%) 400 and T becomes T 350 0.25Y c. Suppose that G rises by 200 to G = Simultaneously, the central bank decreases money supply to 1500. Calculate what will happen to Y* and...
21. What is equilibrium income ($output), Ye? a. $10,400 b. $6,800 c. $3,500 d. $5,100 e. none of the above. 22. If Y,(disposable income) increased by $400, C would a. increase by $380. b. increase by $436. c. decrease by $90. d. increase by $320. e. increase by $360. 23. If both G and T increase by $800, equilibrium Y would a. increase by $1,200. b. increase by $900. c. increase by $720. d. increase by $400. e. none of...
The following information applies to questions 19 - 24. Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400+ 0.9 YD I = 300 G= 160 T= 200, = 400 +0.9 (Y-T) where C is the consumption function, Y, is disposable income, I is investment, G is government spending, and T is taxes. 19. What is autonomous consumption? a. $400 b. $300 c. $0.80 d. $500 e. none of the...
3. Consider the following Keynesian model: C 100 + 0.8 (Y-T) Planned Investment (I) 100 Government Purchase (G) 50 Taxes (T) = 50 a. Graph planned expenditure (PE) as a function of income (Y) b. What is equilibrium level of income (Y)? c. If government purchase (G) is increases to 50, what is new equilibrium income?
please answer 7,8,9,10. thank you so much!!:))
SECTION In the simple Keynesian model with an MPC equal Keynesian model with an MPC equal to 0.80, a S50 billion increase in investment spending leads to a maximum: $50 billion increase in equilibrium income. b. 580 billion increase in equilibrium income $250 billion increase in equilibrium income. d. $400 billion increase in equilibrium income S500 billion increase in equilibrium income. when $2.000 increase in income causes a $1,800 increase in consumption spending...
Consider the following numerical example of the simple Keynesian model: C = 420 +.6YD IP = 90 G= 100 T= 100 NX = 50 where YD = disposable income (Income minus net taxes) T = net taxes i.e., taxes minus transfers) Assume that all of the above variables are measured in billions of dollars per year, and refer to real variables (i.e. adjusted for any inflation that might be happening). For example, the equation for consumption tells us that real...
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....
4. Consider the following numerical example of the IS-LM model C 0.8(Y T); I 1520 240i; T 150 0.25Y; G 200; (M/P)s 1800 (M/P)D 300 0.75Y 300i a. Derive the IS and LM relation. (10%) b. Solove for the equilibrium values of output, interest rate, disposable income.(10%) 400 and T becomes T 350 0.25Y c. Suppose that G rises by 200 to G = Simultaneously, the central bank decreases money supply to 1500. Calculate what will happen to Y* and...
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