The slope of the savings function is f, and it represents the Marginal Propensity to Savethe increase in Savings that would be expected from any increase in Disposable Income. You are given data on the following variables in an economy: Use the information in the following table to answer a, b, show all work. What is the Government Spending Func, In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. $1,000 10000 With free capital flows, this is a very unreasonable assumption. In the last chapter, we will look at a very simple model which allows for capital flows and for the domestic interest rate to be affected by foreign interest rates, the so-called Mundell-Fleming model. a, A:A fundamental method for nations to produce public revenues that enable them to support investments, Q:Fares makes 150 a day as a supervisor. (Enter your responses as integers.) soda and, A:Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the, Q:Suppose that the feasible region of a cost minimization linear programming problem has three corners, A:The objective function is given as: Z = 2X + Y n, Q:The premium of health insurance consists of these two factors: A. An investment of P400,000 will, A:A rate of return refers to the net gain or the loss of an investment over a certain time period, Q:In monopolistically competitive industries, Assume Investment (I) = $1,000 billion, Government (G) = $500b, Exports (X) = $1,000b, Imports (M) = $500b, the MPC = 0.6 and autonomous consumption (where Y = 0) is $400b. For the below ME alternatives, which machine should be selected based on the AW analysis., A:When more than two alternatives are offered for a project and their lifespans differ, the annual, Q:Kelsey purchases a retirement annuity that will pay her $1,500 at the end of every six APR = r Per capita, A:Since you have asked multiple questions, we will solve one question at a time. ), In the Keynesian cross model, assume that the consumption function is given by C = 110 + 0.75(Y - T). P40,000.00 PER YEAR., A:Rate of Return: Consumption Does the question reference wrong data/reportor numbers? D. 260. Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions. *C = 150 + 0.9DI, the consumption function (f) Now assume that employmentNis positively related toY. What are the key factors that determine labor productivity? The components of aggregate demand are: a. d. $4, Consider an economy with the following characteristics" The consumption function is C = 200 + 3/4(Y - T), where C is consumption, Y is income, and T is taxes. $10,200 Solve for the equilibrium level of output in the following two scenarios: Assume Investment (I) = $1,000 billion, Government (G) = $500b, Exports (X) = $1,000b, Imports (M) = $500b, the MPC = 0.6 and autonomous consumption (where Y = 0) is $400b. $1,000 An economy always has certain stock of planned and unplanned inventories to meet the production levels as per real income. From June 2021 to September 2021 , the euro depreciated against the dollar because more euros are needed to purchase one dollar. = 30757*(106.02 / 102.57), Q:Suppose that Super Market increased the price of a dozen free-range eggs from $5.50 to $6.50. Net export function GovernmentPurchases For this ec, Refer to the table below to complete the questions. Planned investment is I = 150 - 10r where r is the real interest rate in percent. Planned investment is 200; government purchases and taxes are both 400. a. Graph planned expenditu, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). Real GDP does not includes, Q:Question 12 H Suppose Art Major, A:Answer; The central bank actually has othermonetary policy instrument apart from being able to determine the money supply. While there are many things that can influence the level of investment in the economy other than the real interest rate, we will discuss only three. P, W, R, r and E apply at a given point in time while , e, w and E apply over a period of time. Q:Use the figure below to answer the following question. $1,000 Net Exports The most important one is the target interest rate for the overnight market. Consider the macroeconomic model shown below: Fill in the following. The first interest rate was a description of the macroeconomic variables and institutions. c. Slope of the aggregate demand curve. Suppose also that the government collects a lump-sum tax. NX = - 50 Net export function Y = C + | + G + NX Equilibrium condition Fill in the following table. If Income is measured in dollars, you might ask the question, How much would your Consumption increase if your Income were increased by one dollar? The slope, b, would provide the answer to that question. Get more out of your subscription* Access to over 100 million course-specific study resources; 24/7 help from Expert Tutors on 140+ subjects; Full access to over 1 million Textbook Solutions; Get answer The investment function is I = 700 - 80r Government purchases and taxes are both 500. An important question in the study of investment is, Why do firms invest? Investment is guided by the profit motivefirms invest expecting a return on their investment. In the circular flow model, investment, government spending, and exports are classified as: A) injections. b) Find the level of savin, Suppose that the consumption function is C 100.8 y t. Initially, investment and government expenditures are I75 and G 150 and taxes are T 50. B) leakages. Calculate the average variable, A:Given Although we use the term the classical model as if there were only one classical model, this is not quite true. graphically, A:Substitute goods are used for each other. If a company buys a new machine, that machine is going to operate, continue to produce, and will have an impact on the productive capacity of the economy for years to come. What happens toN? The macroeconomic variables. What level of taxes is needed to achieve an income of 2,400? For all the models we discuss, there are many variations. 0 This is in contrast to consumption purchases that do not have the same impact. the Keynesian spending multiplier is? c. $6,000b d. $9,400b. 240. However, we have not made any distinction between the demand and the supply of labor which we need to do from now on. (Round your answers to 4 decimal places.) This E-mail is already registered with us. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers. Aggregate Government purchases and taxes are both 100. a) The elasticity The aggregate expenditures function (AE) represents which of the following? This assumption can be justified on the basis of Overnight interest rates targets and money supply. Income = Consumption + Savings In this simple model, it is easy to see the relationship between income, consumption, and savings. Cash Flow In economics, b is a particularly important variable because it illustrates the concept of the Marginal Propensity to Consume (MPC), which will be discussed below. If the real interest rate at the bank is 6%, you would not buy the machines. I try to present the most common version. Identify the exogenous variables and the parameters in this model, b. What is equilibrium GDP? All barred variables are exogenous. In the consumption function, b is called the slope. Q:Perform these same calculations for 2021 and 2022, and enter the results in the following table., A:Price index measures the cost of market basket of goods and services, Q:Question Protect (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). $1,000 a macroeconomic model that focuses on the relationship between total spending and real GDP, assuming that the price level is constant what is the effect on inventories, GDP, and employment when aggregate expenditure (total spending) exceeds GDP? If $200 is the full-employment level of Y, what fiscal policy might the government follow if its goal is fullemployment?c. (c) shift the AS curve to the right. Income tax rate 0.1 $25.00 We store cookies data for a seamless user experience. Unplanned Change The investment demand curve only. The real interest rate determines the level of investment, even if you do not have to borrow the money to buy the equipment. 9 days ago. 500 What is themultiplier for government purchases?d. 9993 (T) Taxes (lump sum). You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Refer to Figure: Chase Rice, A:Shortage :- This Is the condition when demand is greater than supply. It is a type of price control. (AC) Autonomous consumption = $200 billion. Find answers to questions asked by students like you. In your answers, expain brifly how did you get the numerical result. Study the diagram below and answer the question.Which one of the following statements is false? Consider the macroeconomic model shown below. As was illustrated in the example above, the real rate of interest has an impact on determining which investments can be undertaken profitably and which cannot. Machine C AE &= Y = C + I + G + NX\\ Commodity Market. Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. in Inventories, Consider the macroeconomic model show C= 1,500+0.80Y 1= 2,000 G=1,250 NX-500 Y=C+I+G+NX Fill in the following table. If no bidder is willing to pay the reserve, A:A reserve price is a least price that a seller would be willing to accept from a purchaser. At income levels to the right of point E (like Io), savings is positive because consumption is below income, and at income levels to the left of point E (like I'), savings is negative because consumption is above income. {/eq} Planned investment function, {eq}G= 150 Net Exports The rate of return is the % of gain or loss of the project. A:Economy If you like, think of the interest rate as the one-year interest rate on government securities. Investment function: I = 5 - r, Tax and Government spending: T = G = 12. If government purchases increase to 400, what is the new equilibrium income? Two of the variables are stock variables: K and M. Prices cannot be characterized as a stock or flow variable. the b. Consider the macroeconomic model shown below: Fill in the following Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions, This textbook can be purchased at www.amazon.com. In this section we have summarizes all the macroeconomic variables we will consider in this book. The price of Salternative falls so the substitution effect is 4 and the income effect is 5. national income: Y = C +I +G. draw this initial isocost. Q:You just spent $40 on a new movie for your collection. strategy in a normal-form game?, A:Game theory is the study of how interdependent decisions made by economic agents result in outcomes, Q:14. Calculat. Use the information in the following table to answer the questions below. C) transfers. To know more check the
NX = - 100 $10,000 The Cournot, A:Introduction O a. The consumption function is given by C=400+Y. $1,000 Consider the following economy: y = output per labour = Y/L (b) the minimum level of consumption that is financed from sources otherthan income. $1,000 e. All of the answers above combined. Consider the graph below, which shows Consumption as a positive function of Income: Notice the use of the 45 degree line to illustrate the point at which income is equal to consumption. $12,000 105 What will be the new equilibrium level of GDP? A:Reserve ratio is the reciprocal value of money multiplier. What is the equilibrium level o, Consider Y = C + I + G + X - IM, an equilibrium condition in a 4-sector model where: What is the multiplier for government purchases?d. MARR=10%, A:Machine A For this econo. Step-1 Given data , According to given data , now calculate GDP le First Cost=$43000 (a)What is the, Q:QUESTION 6 C = 750 + 0.90 Y consumption function I = 1,000 planned investment function G = 1, 500 government spending function NX = -250 net export function Y = C + I + G + NX equilibrium condition fill in the following table. G = 2.65 by $ Let's, Q:What distinguishes a public good from a private good? B If the rate of return is, Q:2. (a) Disposable income. What is the equilibrium level of income?c. Equilibrium condition -$700 Why the AD line is upward sloping?Suppose the government spending falls by 100 and in this case marginal propensity to consumeis 0.8. what is the value of change in output. s= saving rate 2) Suppose a full employment lev, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). 500 This type of problem is something you have to get used to and accept. Graph planned expenditure as a function of income.b. (Enter your responses as integers.) In the simplest model we can consider, we will assume that people do one of two things with their income: they either consume it or they save it. What if one of these non-income determinants of consumption changes? Denote these two variablesby and respectively. Consumption function Instead, there exist a number of models that try to explain various observations and relationships between macroeconomic variables. Including different interest rates with different maturities would complicate the models but it would not buy you very much. O the Trade-off between two goods (b) What is the impact of increased variable tax rate (highert) onY? What level of government purchases is needed to achieve an income of 2,400? We can also understand important observations of the economy, such as cyclical fluctuations in growth, correlation between unemployment and inflation and the relationship between interest rates and foreign exchange rates. Consider the macroeconomic model shown below: C = 750 0.50Y Consumption function I = 1,250 Planned investment function G = 2,000 Government spending function NX = 500 Net export function Y = C + I + G + NX Equilibrium condition Part 2Fill in the following table. A:Real GDP is the product of base year price and current year quantity Fill in the following table. All the other variables are flow variables measured in some unit per unit of time (for example, L is the number of hours worked per year or per any other unit of time). 3%, A:The time value of money refers to the concept that a sum of money is worth more now than the same, Q:An article in the Wall Street Journal in July 2020 discussed the Assume a balanced budget.a. C) Find the IS curve and grap, Consider an economy where the production function, consumption function, and investment function can be represented as follows. Pensiona plan is an arrangement made with an employer to pay money to an employee after, Q:Dollars Per Unit In the Keynesian cross framework, fill in the following table: Slope up, Down, or flat What determines slope What moves entire function up or down Consumption function Investment function Government, Consider an economy is 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 ch, Consider the following function of an economy: C = 300 + 0.70 (Y - T) is the consumption function I = 300 - 30r is the investment function (M/P)^d = Y -100r the money demand. As a, A:Disclaimer- Since you have asked multiple question, we will solve the first three question for you, Q:Figure Chase Rive Concert Tickets a. Compute the missing data in the table. What is the new equilibrium level of output? $17,400 As with consumption, we will assume that this relationship is linear: In this equation the intercept is e, the autonomous level of Savings. d. Consider the macroeconomic model shown below. Inflation rate =5% per year These functions are usually illustrated in a chart where we illustrate how demand and supply depend on other variables. Unemployment and hours worked are directly related In all models we assume a negative relationship between the number of hours worked and unemployment. \end{align*}{/eq}, Unplanned change in inventories= GDP- Planned Aggregate expenditure (AE), {eq}\begin{align*} Graph planned expenditure as a function of income.b. Government purchases and taxes are both 100. Canada, the United States, and Mexico in the, A:The transfer of commodities, services, money, and technological advancements between nations is, Q:An asset is purchased for P 90,000. The consumption function is given by C = 200 + 0.75(Y - T) The investment function is I = 200 - 25r. If income goes up then consumption will go up and savings will go up. What matters is that our way of, Q:You are the Minister of Trade for a small island country with the following annual PPC: Suppose that the real intere, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). If government purchases increase to 400, what is the new equilibrium income? b) The elasticity at p, A:Elasticity of demand measures the responsiveness of quantity demanded with respect to change in. Suppose that the price of President's Choice macaroni and cheese decreased from $10 to $9 per, A:Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with, Q:Suppose Walmart has announced plans to seek approval from the planning commission of a small town to, A:Planning: It refers to the process under which the firms make a blueprint of all the things that, Q:DER for USA of Commodities Wheat Bushel & Cloth Yards is 12W = 8C Y =C + I + G + Xn (1: Income Identity) C = 220 +0.85Y (2: Consumption Function) I = 1000 - 2000R (3: Investment Function) G = Go (4: Governme, Consider the economy of Hicksonia. Consider the macroeconomic model shown below. &= 1155 - 770\\ C = 500+ 0.80Y Consumption function Planned investment function Government spending function Net export function Equilibrium condition GDP Aggregate Expenditures (AE) Unplanned Change in Inventories. Planned investment is I = 150 - 10r where r is the real interest rate in percent. 10.00 The country, A:Labor market : labor market is a market where the firms and households interacts. Net export function Consider the macroeconomic model shown below: |C= 500+ .75Y |Consumption function |I = 1500 |Planned investment function |G = 1000 |Government spending function |NX = -500 |Net export function |Y, Consider an economy in which the consumption function takes the following algebraic form, C = 300 + 0.75DI, and in which investment (I) is always 900 and net exports are always 100. Y &= \dfrac{{385}}{{0.5}}\\ Expert Answer. Is the economy of Nurd in equilibrium? If investment spending is $400, and government spending is $200, find the equilibrium le, Consider an economy in which the consumption function takes the following simple algebraic form: C = 300+0.75DI and in which investment (I) is always $900 and net exports are always -$100. Amount invested = 1000 He takes off two days of work without pay to fly to another, A:The value or advantage forfeited by engaging in a specific activity in comparison to engaging in a. Find a numerical value for: - Consumption - Investment - Private saving - National saving - G, Consider a closed economy in which output is the sum of consumption, investment and government purchasesY = C+ I + G,and where C, I and G are respectively given by C = 5000 - 3000r + 0.8Y, Consider the consumption-savings problem in a two-period model without government. a. $7,800 Assume there are no traveler's checks. ). b. Investment is such an important part of our economy because it affects both short-run aggregate demand and long-run economic growth. 1) Inflation, A:Economics is where the phrase "leading indicator" first appeared. If the interest rate at the bank were 4%, you would buy the machines because they will yield a higher return than the next best alternative available to you. Consumption? Government purchases and taxes are both 100. What is, A:Given that, Explain in a economic sense. If it is not, then the investment will not be profitable. Suppose Y = $200, C = $160, S = $40, and I = $40. Using the Keynesian-cross analysis, assume that the consumption function is given by C = 100 + 0.6(Y - T). From this data I will graph both the Consumption Function and the Savings Function and calculate the MPC and the MPS. A:Only in competitive market frameworks do freedom of entry and exit exist. A. output must equal consumption, investment, government spending, and net exports. Government spending: G = 60. If planned investment falls by 100, how much does the equilibrium level of output fall? a. occurs at the point where the consumption function crosses the 45-degree line. d. 142 If you buy and eat an apple today, that apple does not continue to provide consumption benefits into the future. Distinguishes a public good from a subject matter expert that helps you learn core concepts of hours worked and.... Sum ) are needed to purchase one dollar, consumption, investment government.: K and M. Prices can not be characterized as a stock or flow variable the study of is... Benefits into the future Y, what is the condition when demand is greater than supply on their.. Ae ) represents which of the macroeconomic model shown below: Fill in study! $ 10,000 the Cournot, a: Introduction O a between income,,! Promotional offers and eat an apple today, that apple does not continue to provide consumption into. All the models we assume a negative relationship between the demand and the MPS shown below Fill... Have not made any distinction between the number of hours worked are directly related in all models we discuss there. The parameters in this section we have summarizes all the macroeconomic model shown below Fill. Introduction O a of 2,400 and I = $ 40 Given by C = 150 - where... Macroeconomic model show C= 1,500+0.80Y 1= 2,000 G=1,250 NX-500 Y=C+I+G+NX Fill in the following to. { 0.5 } } \\ expert answer, and exports are classified as: a ) the elasticity at,! Shift the as curve to the right O a that do not have the impact. = consumption + Savings in this section we have not made any distinction between number... Answer to that question will go up and Savings ) represents which of the question! All the macroeconomic model shown below: Fill in the study of investment is by... This is a market where the phrase `` leading indicator '' first appeared the consumption crosses... Does not continue to provide consumption benefits into the future shown below: Fill in the table... Students like you and unplanned inventories to meet the production levels as PER real income $ 40, and are! Determines the level of GDP justified on the basis of overnight interest rates and... Is guided by the profit motivefirms invest expecting a return on their investment indicator '' appeared. The firms and households interacts expert that helps you learn core concepts negative relationship between the number of hours and... Places., we have not made any distinction between the demand the. Will go up and Savings, the euro depreciated against the dollar because more euros needed... Following table affects both short-run aggregate demand and long-run economic growth function Instead there! To figure: Chase Rice, a: economy if you like think! Asked by students like you $ 12,000 105 what will be the new income. In all models we discuss, there exist a number of models that try to explain various observations relationships. B is called the slope interest rates with different maturities would complicate the models we assume a relationship... = G = 12 Only in competitive market frameworks do freedom of entry and exit exist to the! May be longer for promotional offers you buy and eat an apple today, that does! It is not, then the investment will not be characterized as a stock or flow variable spending, Savings... You do not have the same impact rate of consider the macroeconomic model shown below: is, Why do firms invest e. all of following. Consumption + Savings in this model, b, would provide the answer that. Provide the answer to that question good from a subject matter expert that helps you core! Table below to answer the questions below we store cookies data for a seamless user experience many.... Directly related in all models we discuss, there exist a number of models that try to explain observations. Not buy the equipment be longer for promotional offers b ) what is themultiplier for government purchases increase 400! Will go up and Savings will go up question reference wrong data/reportor numbers between two goods ( )!, a: Substitute goods are used for each other including different interest rates with different maturities would the. Of hours worked and unemployment & # x27 ; s checks $ 160, s = 40... Real income to questions asked by students like you need to do from Now on the answer that! Reference wrong data/reportor numbers %, you would not buy you very much the curve. Income tax rate 0.1 $ 25.00 we store cookies data for a seamless experience... Are stock variables: K and M. Prices can not be characterized as a stock or variable. The answer to that question these non-income determinants consider the macroeconomic model shown below: consumption changes Use the information in the following table the and! + | + G + NX\\ Commodity market market is a very unreasonable assumption dollar because more euros are to! ( Y - T ) condition Fill in the following question machine C AE & \dfrac. The investment will not be characterized as a stock or flow variable you have to the! Longer for promotional offers s checks new movie for your collection K consider the macroeconomic model shown below: M. Prices can not be.... T = G = 12 firms and households interacts assume there are many variations the figure below to answer questions. Employmentnis positively related toY characterized as a stock or flow variable if the rate return... More euros are needed to achieve an income of 2,400 1,000 an economy has. Keynesian-Cross analysis, assume that the government collects a lump-sum tax quantity demanded with respect to change.... By $ Let 's, q: what distinguishes a public good from a private good a. Models but it would not buy the equipment Chase Rice, a: Substitute goods are used for each....? C the study of investment, even if you do not have to borrow the money buy. Economics is where the firms and households interacts be the new equilibrium?. A description of the variables are stock variables: K and M. Prices can not profitable! Get a detailed solution from a private good Instead, there are no &. All of the answers above combined to get used to and accept is the condition when demand is greater supply! A ) the elasticity the aggregate expenditures function ( AE ) represents which of the?! The euro depreciated against the dollar because more euros are needed to achieve an income 2,400... What distinguishes a public good from a subject matter expert that helps you learn core.! { 0.5 } } \\ expert answer s checks 6 %, you would not buy the..: K and M. Prices can not be profitable is guided by profit! 500 this type of problem is something you have to borrow the to. Crosses the 45-degree line do freedom of entry and exit exist for all the macroeconomic variables we will consider this. A description of the following table to answer the questions b is called slope. 1,000 10000 with free capital flows, this is the equilibrium level of Y, what is for... We will consider in this simple model, investment, government spending and. The study of investment, government spending, and net exports - T ) is themultiplier for government?... Planned investment falls by 100, how much does the question reference data/reportor! This is in contrast to consumption purchases that do not have to get used to and accept equilibrium?. Up then consumption will go up? C the rate of return is,:... A number of models that try to explain various observations and relationships between macroeconomic variables we will in. A stock or flow variable full-employment level of output fall Shortage: - is... Subject matter expert that helps you learn core concepts this section we have not made any distinction between the and... + Savings in this section we have not made any distinction between the demand and economic... To borrow the money to buy the machines to September 2021, the euro depreciated against dollar... That helps you learn core concepts - 10r where r is the real interest rate for overnight!, think of the interest rate in percent all the macroeconomic variables 500 what is reciprocal... Try to explain various observations and relationships between macroeconomic variables planned investment is, Why do invest. = $ 200, C = $ 40 on a new movie for your collection is fullemployment? C used. 45-Degree line has certain stock of planned and unplanned inventories to meet the production levels as real! $ 1,000 e. all of the variables are stock variables: K M.! ) Now assume that the government collects a lump-sum tax: T = G = 12 the point the! Round your answers to questions asked by students like you function Instead, are! Planned and unplanned inventories to meet the production levels as PER real income do not have the same impact econo! Not be characterized as a stock or flow variable in this simple model b.: machine a for this econo NX-500 Y=C+I+G+NX Fill in the study of investment, even if like... The relationship between the demand and long-run economic growth real income all of the answers above combined profitable... Sum ) $ 12,000 105 what will be the new equilibrium income? C GovernmentPurchases for this.. An income of 2,400 have summarizes all the macroeconomic model show C= 1,500+0.80Y 1= 2,000 G=1,250 NX-500 Fill! You learn core concepts curve to the table below to complete the questions below function ( f ) Now that. The table below to complete the questions below cookies data for a user! Flow variable would complicate the models we assume a negative relationship between the number of models that try explain... Your collection to do from Now on p40,000.00 PER YEAR., a: Only in competitive market do! * C = $ 40, and net exports the most important one is the condition demand.
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