1. Calculate the MPC in the above diagram. 2. Based on Diagram 1, If private Investment of $100 is added to the existing C, calculate the new equilibrium level of NI. 3. Given your answer to the previous question (question #2) calculate by how much G should change, if the full employment level in the economy is at $3000.

1. Calculate the MPC in the above diagram. 2. Based on Diagram 1, If private Investment of $100 is added to the existing C, calculate the new equilibrium level of NI. 3. Given your answer to the previous question (question #2) calculate by how much G should change, if the full employment level in the economy is at $3000.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

See similar textbooks

Related questions

Q: Now assume you are examining a new economy. You learn that the mpc of this new economy is 0.75 and…

A: Given Information MPC = 0.75Change in Output level = 3,000so, Multiplier = 11 -mpc

Q: a. By how much will GDP change if firms increase their investment by $8 billion and the MPC is 0.9…

A: Due to multiplier effect there will be an increasing effect in GDP due to investment.

Q: The equilibrium position for an economy is represented by the following equations: Y = C + I, + G…

Q: Very briefly summarize the relationships shown by (a) the consumption schedule, (b) the saving…

A: A consumption schedule is a table that represents the relation between income and consumption…

Q: 1.11 If desired investment exceeds actual investment, then… a) The economy is in a recession. b)…

A: Hi! thanks for the question but as per the guidelines, we can answer only one question at one time.…

Q: Given the following table. Income (RM million) Consumption (RM million) 0 100 100 150 200…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Let’s analyze the rational behavior and well-being of 3 different individuals in regards to their…

A: The intertemporal consumption model is an economic framework that helps individuals and economists…

Q: Answer the following questions: Instructions: Enter your answers rounded to the nearest whole…

A: MPC, marginal propensity to consume is the proportion of change in income that is spent on…

Q: Q1: Refer to the information provided in the Table below, answer the questions that follow:…

A: Marginal propensity to consume is the proportion of the disposable income that a person wants to…

Q: For an economy the following consumption function is given : C = 60+0.75 Y. %3D (a) If investment in…

A: Answer: Y =380

Q: Study the scenario and complete the question(s) that follow(s): Silesia You are provided with the…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: A)If actual investment is greater than planned investment, inventories increase more than planned.…

A: “Hey, since there are multiple subparts questions posted, we will answer the first three subpart…

Q: Now assume you are examining a new economy. You learn that the mpc of this new economy is 0.75 and…

A: Marginal propensity to consume refers to the rate of change of consumption level with the rate of…

Q: Instructions: Use the tool provided "AE" to show the complete aggregate expenditures schedule that…

A: Aggregate expenditure refers to the total amount of spending by households, businesses, government…

Q: Fill in the aggregate saving column in the following table. Use the data in the table to calculate…

A: Aggregate Income, Y Aggregate Consumption, C Aggregate savings, S $0 200 0-200=-200 100 250…

Q: Given

A: Given that , Consumption expenditure C= 50 + 0.7 ( Y - T ) Investment expenditure I = 100…

Q: Complete the following table:a. Show the consumption and saving schedules graphically.b. Find the…

A: Average propensity to save shows the ratio of saving to income. Average propensity to consume shows…

Q: Suppose the United States economy is represented by the following equations: Z = C + I + G…

A: National income or equilibrium level of output depends on various factors such as household…

Q: Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+…

A: The current value of all finished goods and services in the economy is defined as aggregate…

Q: Suppose the consumption function is given by C = 100 + 0.8YD and that I = 50, while G=200, TR=62.5…

A: Given,

Q: The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The…

Question

Answer all four questions based on the following diagram.

1. Calculate the MPC in the above diagram.

2. Based on Diagram 1, If private Investment of $100 is added to the existing C, calculate the new equilibrium level of NI.

3. Given your answer to the previous question (question #2) calculate by how much G should change, if the full employment level in the economy is at $3000.

4. Based on the answer to the previous question (question #3), if half of those government expenditures are financed through lump sum taxes, calculate the new level if NI? (C+I+G)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Trending now

This is a popular solution!

Step by step

Solved in 4 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Macroeconomics Question No.2 Suppose the consumption function is given by C = 100 + 0.8YD and that I = 50, while G=200, TR=62.5 and t=0.25. What is the equilibrium level of income? What is the level of saving in equilibrium? If investment were to rise to 150, what would be the effect be on equilibrium income. What is the value of multiplier in part a. and c. Draw a diagram indicating the equilibrium in part a. and c.
Complete the following table:a. Show the consumption and saving schedules graphically.b. Find the break-even level of income. Explain how it is possible for households to dissave at very low income levels.c. If the proportion of total income consumed (APC) decreases and the proportion saved (APS) increases as income rises, explain both verbally and graphically how the MPC and MPS can be constant at various levels of income.
Study the scenario and complete the question(s) that follow(s): Silesia You are provided with the following information about an imaginary economy called Silesia. Use the information provided in the table to answer the questions below. Government expenditure 400 Exports 250 Autonomous imports 50 Autonomous consumption 150 Investment Expenditure 300 Full-employment output 2040 Marginal propensity to consume 0.75 Marginal propensity to import 0.15 Таx rate 0.25 5.1 Derive and calculate the consumption function for the data provided. Show all formulas and calculations used. 5.2 Calculate autonomous spending. Show all formulas and calculations used. 5.3 Calculate the multiplier. Show all formulas and calculations used. Round off your final answer to 1 decimal. 5.4 Calculate the equilibrium level of income, using the values calculated in 5.2 and 5.3 above. Show all formulas and calculations used. 5.5 Calculate the government surplus or deficit at the equilibrium level of income. Show all…
Suppose the United States economy is represented by the following equations: Z = C + I + G C = 500 + .5YD T = 600 I = 300 YD = Y - T G = 2000 Given the above variables, calculate the equilibrium level of output. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output? How much does income change as a result of this event? What is the multiplier for this economy?
Very briefly summarize the relationships shown by (a) the consumption schedule, (b) the saving schedule, (c) the investment demand curve, and (d) the multiplier effect. Which of these relationships are direct (positive) relationships and which are inverse (negative) relationships? Why are consumption and saving in the United States greater today than they were a decade ago?
The equilibrium position for an economy is represented by the following equations: Y = C + I, + G %3D C = a + b(Y – T) T = tY Let a = 25, b = 0.8 and t = (0.3. %3D Determine the value of the multiplier for this economy. Show your working.
Given the following model of an Economy as follows:- (10 marks) C = 50 + 0.7 Yd (Yd = Y-T) (Consumption & Expend) I = 100 (Investment Expend) X = 20 (Exports ) M = 10 – 0.27 (Imports) T=25 interepret the consumption Function i) Determine Equilibrium level of National Income ii) Consumption level at Equilibrium level of Income iii) Total import at equilibrium Income
1. Given the following table. Income (RM million) Consumption (RM million) 0 100 100 150 200 200 300 250 400 300 500 350 How much is the autonomous consumption in the economy? How much investment should be increased to achieve an income of RM400 million? Calculate the MPS. Derive the consumption function. 2. Given the following information, C = 500 + 0.7Yd T = 0.2Y I = 400 G = 100 Calculate the national income equilibrium. Based on your answer in (a), draw the aggregate expenditure graph. Suppose that investment changes by 300, what would happen to the national income equilibrium? Suppose that tax (T) changes, and the new T is T = 0.2 Y + 50, calculate the new national income equilibrium. 3. Given the following information, S = -200 + 0.3Y I = 100 Calculate the national income equilibrium by using the Leakage-Injection approach. Calculate the value of saving. Draw the aggregate expenditure graph.
Let’s analyze the rational behavior and well-being of 3 different individuals in regards to their saving and borrowing behavior. I recommend drawing the intertemporal consumption model graph for each of the following situations. We will be analyzing three individuals; Charlie is saving at the current interest rate, Allison is borrowing at the current interest rate, and Chris is neither saving nor borrowing at the current interest rate. (a) Charlie is currently saving money (spending less than his current income) at the current interest rate. Will he be made better off if the interest rate subsequently increases? (b) Allison is currently borrowing money (spending more than her current income) at the current interest rate. Will she be made better off if the interest rate subsequently increases? (c) Chris is currently neither saving nor borrowing (spending exactly his current income) at the current interest rate. Will he be made better off if the interest rate subsequently increases?…
Need help with this. Thanks! Just for information the point can move left and right and the line can move up and down. When line moves up the point can move to the left only and when the line moves down, the point can move to the right only. I hope that makes sense to you.
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. (Enter your responses as integers.) Aggregate Expenditures (AE) $ $ GDP $11,600 $17,400 Unplanned Change in Inventories
Now assume you are examining a new economy. You learn that the mpc of this new economy is 0.75 and that the government wants to increase the level of output by $3000. What change in T achieves this desired change in Y? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a -$3000 b -$1000 C -$750 d $750