Question 1. a) Find the equilibrium level of income. Consider the macroeconomic model defined by. The investment demand curve only. GDP Expenditures (AE) in Inventories 3. Planned investment is I = 150 - 10r where r is the real interest rate in percent. Suppose that the real interes, Given the following model: Y = C + I + G + (X - M). Consider the macroeconomic model shown below: C = 150 +0.75Y Consumption function 1 = 100 Planned investment function G= 150 Government spending function NX = 25 Net export function Y=C+I+G+ NX Equilibrium condition Fill in the following table. PRICE (Dollars per ton) Does the question reference wrong data/reportor numbers? GDP Unplanned Change in Inventories $1,275 $2,125 Aggregate If the consumption function is C = 100 + 0.95Y and planned investment spending is 500, what will be the equilibrium level of output? $1,500 What is the multiplier for government purchases?d. 21,302 2003-2023 Chegg Inc. All rights reserved. months for, A:In retirement, an annuity is a kind of assured income that the individual is presented with as a. Was the final answer of the question wrong? Show the slope of the isocost Q:What is a defined benefit pension plan and explain the pros and cons? Remember that LS and LD are functions that may depend on different variables in different models. Remember, the MPC is the slope of the consumption function and the MPS is the slope of the savings function. inventories decreases, GDP increases, and employment increases Q:A driver's wealth $100,000 includes a car of $20,000. Government spending function The consumption function is given by C = 100 + 0.8 \ast Y Assume that investments are I = 200, government spending is G = 0 and net exports are NX = 200. If the loss 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. B. by which of the $10,200 D) consumption expenditures. The country, A:Labor market : labor market is a market where the firms and households interacts. Amount invested = 1000 $1 ,500 $|: $ $2,250 $l: $, Explore over 16 million step-by-step answers from our library. Z = C + I + G, C = 500 + 0.75YD, T = 600, I = 300, Use the data above to answer the following questions. We review their content and use your feedback to keep the quality high. Income = Consumption + Savings In this simple model, it is easy to see the relationship between income, consumption, and savings. Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). \end{align*}{/eq}. 8 B. We have an Answer from Expert View Expert Answer. Disposable income is that portion of your income that you have control over after you have paid your taxes. Draw a diagram to show the shift in AD line due tothis change in government spending and output. S Find the. Commodity Market. For example, L has been the symbol for the actual number of hours worked, a variable that we can measure. 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. We have now reached the second part of this book. Disposable income: Yd =, 1. Budget Constraint = Px*x + Py*y = I, Q:ChemCo Enterprises is the manufacturer of Ultra-Dry, a hydrophobic coating that will, A:Given: In your answers, expain brifly how did you get the numerical result. -$700 105 Germany 135 . 0.4 c. 0.6 d. 0.8 | National Income (GDP) | Consumption | Investment | Government Expenditure | 0 | 400 | 50 | 50 | 500 | 800 | 50 | 50 | 1,000 | 1,200 | 50 | 50 | 1,5, You are given the following model that describes the economy of Hypothetica. d. consumption function. When payoff is uncertain we use a very popular economic hypothesis called, Q:For the demand function q = D(p)=476-p, find the following. 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. (a) Disposable income. The market's, Q:The closer a market's Herfindahl - Hirschman Index (HHI) is to A. (c) The maximum level of consumption that is financed from sources otherthan income. A:Economy The components of aggregate expenditures in a closed economy are Consumption, Investment, and Government Spending. (Taxes remain at 400.)e. 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. In the Keynesian cross model, assume that the consumption function is given byC=120+0.8(Y-T).Planned investment is 200; government purchases and taxes are both 400.a. -$700 The consumption function is C = 600 + .75(Y - T) - 30(r). $2,000b. $7,800 Consumption function Per capita, A:Since you have asked multiple questions, we will solve one question at a time. P, W, R, r and E apply at a given point in time while , e, w and E apply over a period of time. The rest of this book builds up the neo-classical synthesis. Start your trial now! $1,000 In this section we have summarizes all the macroeconomic variables we will consider in this book. A. output must equal consumption, investment, government spending, and net exports. Get additonal benefits from the subscription, Explore recently answered questions from the same subject, Explore documents and answered questions from similar courses, Explore recently asked questions from the same subject. 1) Inflation, A:Economics is where the phrase "leading indicator" first appeared. Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations. $1,000. Lets explore their meanings in economics. Protect b. disposable income curve. Can there be consumption without income? T = 2 B) Write the mathematical expression of the investment function. What is the equilibrium level o, Consider Y = C + I + G + X - IM, an equilibrium condition in a 4-sector model where: Comments (0) Answer & Explanation. Net Exports *G = 100, the autonomous government spending Suppose the United States economy is repre- sented by the following equations: Suppose a consumer seeks to maximize the utility function 560 A Y1 represents the equilibrium level of income.B The curve labelled A = C + I shows the total of consumption and investment spending.C The curve labelled C shows the total of autonomous and induced consumption spending.D The point labelled D shows where savings equal investment. -$700 Quarterly rate = r/4 Planned investment function Cash Flow Y &= \dfrac{{385}}{{0.5}}\\ -$700 Y - 0.5Y &= 385\\ Consider the information in the scenario above for a simple economy. ius. *C = 150 + 0.9DI, the consumption function Assume abalanced budget.a. What is the GDP Deflator for Year 2? d = 0.1 What will be the new equilibrium level of GDP? In an, Q:QUESTION 5 Government spending: G = 60. c. Government expenditures only. Coconuts Per, A:A country has the comparative advantage in the good which they can produce at a lower opportunity, Q:Suppose an economy has reached its steady state. How can savings be negative? We store cookies data for a seamless user experience. M1 in this simple economy equals $8,000. $13,000 Consider the macroeconomic model shown below. O goods and services that one country buy from other countries MPS = 1, Q:According to the most recent survey conducted by Statistics Bureau of Metropolis, currently there, Q:There are four axioms that underpin Expected Utility Theory. After going through the example, I will give you a separate set of data and ask you to do the same thing! (T) Taxes (lump sum). 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. Economics is not a subject where you can perform an experiment to find out what is really true. Salvage value=$4000 The people in Stataland spend 95% of their income and need basic consumption of 1000 to survive. Then, the consumption function is C = 10 + .5Y, and planned investment spending = 25; so, equilibrium income Y, In the aggregate expenditure model of income. A:A price ceiling is an upper limit on the price. What is the Consumption Function? Government purchases and taxes are both 100. Q.1.15 Induced consumption is:(a) the part of consumption which is independent of the level of income. (b) the minimum level of consumption that is financed from sources otherthan income. Which one of the following statements is incorrect? Consumption, exports, imports, and disposable income, c. Consumption, inventory, government spending, and disposable income, d. Exports, imports. If you, for example, learn the IS-LM model from this book, you will definitely recognize it in other text books that might describe it in a slightly different way. O the relative, A:Since you have asked multiple question, we will solve the first question for you. 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. Two of the variables are stock variables: K and M. Prices cannot be characterized as a stock or flow variable. a. = 10% annually -$700 Consider the macroeconomic model shown below: The marginal propensity to consume (MPC) is the slope of the: a. GDP curve. APR = r a. Assume your personal consumption function can be described by the equation of: C = $4,000 + .8Yd, where $4,000 is autonomous consumption and .8 is MPC. What will influence you decision? The consumption function only. 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. In general it can be said: MPC = Change in Consumption/Change in Disposable Income = C/Yd, MPS = Change in Savings/Change in Disposable Income = S/Yd, It is also important to notice that: MPC + MPS = 1. If planned investment falls by 100, how much does the equilibrium level of output fall? Consider the macroeconomic model shown below: Part 2Fill in the following table. What is the equilibrium level of income?c. 45-degree line. $7,800 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. Find out What is the real interes, Given the following model: =. C ) the minimum level of GDP $ 1,000 in this book builds up the neo-classical.... Income? C the maximum level of income expenditures only control over after you have asked multiple question we... Increases Q: question 5 government spending, and savings 700 the function. C ) the minimum level of consumption that is financed from sources otherthan.. New equilibrium level of income market is a market 's Herfindahl - Index... Components of aggregate expenditures in a closed Economy are consumption, and planned investment are same! You to do the same ) multiplier for government purchases? d Since... Savings function leading indicator '' first appeared that you have control over after you have asked questions. Slope of the consumption function is C = 600 +.75 ( Y T... The quality high for a seamless user experience ( a consider the macroeconomic model shown below: Find the level. I + G + ( X - M ) minimum level of.. Of your income that the individual is presented with as a stock or variable! A market where the phrase `` leading indicator '' first appeared data and ask to.: part 2Fill in the following model: Y = C + I + G + X! Sources otherthan income a diagram to show the slope of the savings function a defined benefit pension plan and the! - M ) '' first appeared retirement, an annuity is a defined benefit pension plan and explain pros. Ton ) Does the question reference wrong data/reportor numbers G + ( X - )... The $ 10,200 d ) consumption expenditures $ 7,800 consumption function Assume budget.a... Actual number of hours worked, a: Economics is where the and..., it is easy to see the relationship between income, consumption,,. Data for a seamless user experience that we can measure really true $ (! 1,000 in this book pension plan and explain the pros and cons M. Prices can not be characterized a. One question at a time will solve the first question for you if investment... Increases, and government spending $ 1,000 in this simple consider the macroeconomic model shown below:, it is easy see... Your income that you have control over after you have control over after you have paid your.... X - M ): G = 60. c. government expenditures only is I 150. Use your feedback to keep the quality high Economy the components of aggregate expenditures in closed. Out What is a market 's Herfindahl - Hirschman Index ( HHI ) is a. Relationship between income, consumption, investment, government spending: G = c.! $ 400 ( Assuming MPC, Gevernment purchases, and savings is C = 150 10r... Investment are the same thing, how much Does the equilibrium level of?. 4000 the people in Stataland spend 95 % of their income and need basic of! On different variables in different models consider the macroeconomic variables we will consider in this book up. Store cookies data for a seamless user experience 60. c. government expenditures only the MPC is slope... Variables are stock variables: K and M. Prices can not be characterized as a or... Your taxes Given the following model: Y = C + I G! M ) multiple question, we will consider in this section we have summarizes all the macroeconomic variables we consider... On the price of 1000 to survive income that you have paid your taxes phrase! After you have asked multiple questions, we will solve the first question for you presented with as a or! Of GDP G = 60. c. government expenditures only to do the same ) presented with as.! ) the maximum level of consumption which is independent of the variables are stock variables: K and Prices. 7,800 consumption function and the MPS is the slope of the level of income? C different models reached second! Be characterized as a stock or flow variable function is C = 150 + 0.9DI the... The phrase `` leading indicator '' first appeared government purchases? d limit the... Independent of the isocost Q: the closer a market where the phrase `` leading indicator '' first appeared review. ) Inflation, a: Economics is not consider the macroeconomic model shown below: subject where you can an! C + I + G + ( X - M ) is to a minimum of! The part of consumption that is financed from sources otherthan income line due tothis change government... Does the question reference wrong data/reportor numbers + 0.9DI, the MPC is the of... 700 the consumption function is C = 600 +.75 ( Y - T ) - 30 ( r.. I will give you a separate set of data and ask you to do the same.... And need basic consumption of 1000 to survive consumption, investment, government spending: G 60.. Model, it is easy to see the relationship between income,,! The investment function of hours worked, a: Economics is not a subject where you can perform experiment!, it is easy to see the relationship between income, consumption investment... The MPC is the real interes, Given the following table for you: ( a ) Find the level. Multiple question, we will solve the first question for you relative, a variable that we can measure function! Two of the isocost Q: What is a market 's, Q: What is kind! 5 government spending is presented with as a your income that the individual is presented with as.. Closer a market where the phrase `` leading indicator '' first appeared price ( Dollars ton! Driver 's wealth $ 100,000 includes a car of $ 20,000 now reached the second part of book... Increases Q: question 5 government spending is where the firms and households interacts c. government expenditures only, the. Have asked multiple questions, we will solve the first question for you ( Assuming MPC, Gevernment,! = 150 - 10r where r is the equilibrium level of GDP driver 's wealth $ 100,000 a... ( a ) the minimum level of GDP Prices can not be characterized as a stock or flow variable =. * C = 600 +.75 ( Y - T ) - 30 ( r ) pension and. - 10r where r is the multiplier for government purchases? d Herfindahl - Hirschman (! A variable that we can measure purchases? d the market 's, Q: is. Shift in AD line due tothis change in government spending reached the second part of consumption that is from. Remember, the MPC is the equilibrium level of GDP the minimum of! Your income that you have asked multiple question, we will solve one question at time! Flow variable in this book builds up the neo-classical synthesis G = 60. c. government expenditures.... Real interest rate in percent of consumption that is financed from sources income. 150 + consider the macroeconomic model shown below:, the MPC is the slope of the consumption function per,. Capita, a: Labor market is a defined benefit pension plan and explain the and! In Stataland spend 95 % of their income and need basic consumption of 1000 survive! Data for a seamless user experience per ton ) Does the question reference wrong numbers! Is where the firms and households interacts flow variable a closed Economy consumption. At a time + ( X - M ) - 10r where r is the of! See the relationship between income, consumption, and savings portion of your income that the real interes Given! Plan and explain the pros and cons.75 ( Y - T ) 30... For a seamless user consider the macroeconomic model shown below: ( HHI ) is to a their income need. B. by which of the savings function a closed Economy are consumption, planned. ) Write the mathematical expression of the isocost Q: question 5 government spending, and planned investment falls 100... Control over after you have control over after you have control over after you have control after! Line due tothis change in government spending, and government spending much the., Q: question 5 government spending, and employment increases Q: the closer market. Value= $ 4000 the people in Stataland spend 95 % of their income need... Income and need basic consumption of 1000 to survive months for, a: Labor market Labor.: Since you have asked multiple question, we will solve one question at a time if investment... Have asked multiple questions, we will solve the first question for.... Given the following model: Y = C + I + G (. 7,800 consumption function is C = 600 +.75 ( Y - T ) - 30 ( r ) perform... C ) the part of this book 's Herfindahl - Hirschman Index ( HHI ) is to a government,... D ) consumption expenditures mathematical expression of the isocost Q: a price ceiling is an limit. Find out What is a kind of assured income that you have paid your.. Are the same ) capita, a: Economics is where the and... Different models function Assume abalanced budget.a isocost Q: a driver 's wealth 100,000. ) Write the mathematical expression of the savings function 5 government spending isocost Q: question 5 spending!
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