12. Assume that the consumption function is given by C=200+ 0.7 (Y-7), the tax function is given by T= 100+ 0.2Y, and Y= 50K0.5L0.5, where K = 100. If L increases from 100 to 144, then consumption increases by: a. 560. b. 840. c. 1,120. d. 2,120.

12. Assume that the consumption function is given by C=200+ 0.7 (Y-7), the tax function is given by T= 100+ 0.2Y, and Y= 50K0.5L0.5, where K = 100. If L increases from 100 to 144, then consumption increases by: a. 560. b. 840. c. 1,120. d. 2,120.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Consider an economy in which individuals choose between work time and leisure time. They spend all…

A: * Answer :-

Q: A. B. C. Derive mathematically the lifetime budget constraint in this case. (Hint: From micro, what…

A: A budget constraint, also known as a budget constraint equation or budget line, is a mathematical…

Q: In what situation can property tax become a regressive tax? When the property owner starts living on…

A: Given the question is In what situation can property tax become a regressive tax. When the…

Q: What is the effect of a rise in the income tax on interest income? A rise in the income tax on…

A: Income tax is a sort of tax levied by governments on the earnings of enterprises and persons within…

Q: Suppose MPC is 0.8. If government purchases increases by $10ce and cuts taxes by $50B, how much the…

A: Government spending multiplier = 1 / [1 - MPC] Tax multiplier = MPC / [1 - MPC]

Q: Suppose that the investment demand curve in a certain economy is such that investment declines by…

A: The government has various policies to balance the economic activities. Imbalances in these economic…

Q: 1. Over the past 40 years interest rates in the developed world have fallen to very low levels. One…

A: Consumption in a nation is influenced by the level of income, just as demand for an item is…

Q: Which of the following is contractionary fiscal policy? raising income tax rates subsidizing basic…

A: A contractionary fiscal policy is implemented by the government through the reduction of its…

Q: Consider the consumption function: C = 120+ 0.8Yd where Yd is disposable income. a) Write down…

A: In this case, the consumption function is given as *, where YD is the disposable income.

Q: Given the following data for a closed economy |= 3400 Planned Investment G=4000 Government Spending…

A: A way of measuring the economic wellbeing of a nation, the GDP is the amalgamation of all the values…

Q: 4. Consider the following government's budget constraint: T₁ = Gt +TR₁ = √Yt +TRt, where TR is the…

A: The government transfer payment is the kind of money benefit given by the government to the…

Q: The data in the table below are for the economy of Nubia. a. Complete the AE column. Y Yo C S I G X…

A: The measure that depicts the relationship between disposable income and total consumption is known…

Q: 3. Suppose an economy had aggregate demand components with the following relationships: Consumption…

A: a. The computation of equilibrium income:Using the provided equations for consumption spending,…

Q: 3. Assume that inflation is zero, so that i = r. This economy's central bank follows a given…

A: Where; C(Yd)= Consumption Yd= Disposable income I(r)= Investment G= Government spending t= Marginal…

Q: Archanges sared 1. Suppose your total taxable income this year is $75,000. You are taxed at a rate…

A: Taxes are the compulsory payments levied on individuals and organizations by the government to…

Q: Suppose equilibrium GDP is less than full-employment output and the economy is in a recession. What…

A: Fiscal policy is used by government to make the economy going normal without any fluctuations. The…

Q: rue or false questions. Need asap. I put the answers I got for each one. 5. A core inflation index…

A: Answer -

Q: If the consumption function is C=800+ 0.6(Y-7), output, Y,= $3,100 and net taxes, T, = $100, then…

A: Equilibrium Output It alludes to the level of output where the Aggregate Demand is equivalent to the…

Q: 2. Suppose the consumption function of country A is C-1000+ 0.8Y, ( is the disposable income).…

A: Equilibrium condition: Y= C+I+G

Q: By how much will consumption change if disposable income in the economy changes by -447?

A: Here C = 0.81(Yd) + $707.13 here the Yd is the disposable income 0.81 is the marginal propensity…

Q: OilPatch is a mineral rich economy in which the government gets most of its tax revenue from oil…

A: Initially, the government introduced an income tax of $2 per hour worked.Then it doubled its income…

Q: Q.3 Suppose that the consumption function is defined as C=a+b(1-k)Y-bT where a-bT =0 and both…

A: In the given consumption function, values of a, b, k and T-bar are exogenously given. Values of C…

Q: a. Assuming the level of investment is $15 billion and independent of the level of total output,…

A: In terms of its potential to ease economic downturns through government involvement, Keynesianism…

Q: In the economy of Akron, the tax and savings functions are as follows: T=220+0.2Y S=-140+0.3Y a)…

A: The consumption function is an economic concept that shows the relationship between consumer…

Q: C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550Q.2.5 Calculate what the new…

A: The tax Rate is zero while all other factors remain constant. First, the autonomous expenditure (AE)…

Q: Say, for an economy, MPC = 0.75. The taxation multiple Select one: Ob. -3 Oc.-2.5 8.d. -0.25

A: The tax multiplier is a measurement of how much the Gross Domestic Product (GDP) changes in response…

Q: Assume the consumption function is C = 200+ (0.8) YD and the income tax rate is t = 0.25. What will…

A: Budget surplus: A budget surplus is simply having more income than expenses during a specific period…

Q: 1.2. The consumption function for a simple economy is given by C = 330 + 0.6Y 1.2.1. Write an…

A: consumption is the amount of income which is not saved. and it is influence by the disposable income…

Q: Thelma's current income is $100,000 and she currently pays $30,000 in income tax. Any income she…

A: Average tax rate = (Total tax paid / Total income) Marginal tax rate = (Change in tax paid / Change…

Q: A) The aggregate consumption function of Ekonland is known to be C= a + bYa and the tax structure is…

A: 1) Y = C + I + G + X - M Y= a + b(Y - T) + I + G + X - M Y = a + b(Y - TO - tY) + I + G + X - M Y =…

Q: Figure S-23. The figure represents the relationship between the size of a tax and the tax revenue…

A: Laffer curve refers to the curve that depicts the relationship between the tax revenue of the…

Q: Suppose in Fiscalville there is no tax on the first $10,000 of income, but a 20 percent tax on…

A: 0−10,000 = No tax 10,000 − 20,000 = 20% 20,000 − 30,000 = 30 % > 30,000 = 40%

Q: 68. Consider the following consumption function C = 1100 + 0.6Yd What is the MPS? O a. 0.8 O b. 0.7…

A: Marginal propensity to save (MPS) is the fraction of an increase in income that is not spent and…

Q: Refer to the accompanying table for Waxwania. Government Expenditures, G Tax Revenues, T Real GDP…

A: Average tax rate = (Tax paid / Taxable income) => Average tax rate = (Tax revenue / Real GDP)…

Q: 23. Which of the following is an indirect tax? A tax on company profits consumer goods and services…

A: Tax refers to the payment made by a consumer or producer to the government of a nation. It is used…

Q: Consider the case of a closed economy for which the following initial data are known: c=0.70, t=0.3;…

A: Introduction We have given data of a closed economy. c = 0.70 , t = 0.3 , government expenditure…

Q: Suppose that the investment demand curve in a certain economy is such that investment declines by…

A: Given: The decline in investment for every 1% point increase in the real interest rate=$110 billion…

Q: income, defined as the difference between income Y and taxes T. You observed that, after an increase…

A: Marginal propensity to consume states change in consumption due to change in income we can find the…

Q: 1.Diminishing Returns to Capital and Real Wages. Explain why this statement is wrong: "Since capital…

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

Q: Suppose there is a simultaneous increase in government spending (fiscal policy) and autonomous…

A: Re-arranging the functions : Consumption function : C = C0 + bY - bT Tax : T = T0 + tY Similar…

Question

12. Assume that the consumption function is given by C= 200+ 0.7 (Y-7), the tax function is given by T =
100+ 0.2Y, and Y= 50K0.5L0.5, where K= 100. If L increases from 100 to 144, then consumption increases
by:
a. 560.
b. 840.
c. 1,120.
d. 2,120.

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

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

how much will a $100 tax cut increase disposable income? How much will it increase consumption? (hint: mpc=.75) Taxes cause income and consumption to fall disposable income will rise by $75 Consumption will rise by $100 consumption and income will rise by $100 consumption will rise by $75 disposable income will rise by $100 O O C
Consider the following NIPA data for 1Q2021 (First Quarter 20210 $ billlion) Investment: Non Residential $2,948.3 Exports $2,305.3 PCE Goods $5,183.5 Investment: Residential $1,043.7 Government Expendiures Federal $1,557.0 PCE Services $9,857.7 Imports $3,152.3 Governemnt Expenditures : State and local Goernent Expenditures $2,395.9 Change in private inventories -$90.1 1. Write the formula for GDP Compute the following: 2. Personal Consumption Expenditures (PCE): 3. Gross Private Domestic Investment (GPDI) 4. Net Exports (NX) 5. Government Expenditures (GOV) 6. GDP
Consider the following NIPA data for 1Q2021 (First Quarter 20210 $ billlion) Investment: Non Residential $2,948.3 Exports $2,305.3 PCE Goods $5,183.5 Investment: Residential $1,043.7 Government Expendiures Federal $1,557.0 PCE Services $9,857.7 Imports $3,152.3 Governemnt Expenditures : State and local Goernent Expenditures $2,395.9 Change in private inventories -$90.1 2a. Compute the weights of each of PCE, GPDI, NX and GOV) in GDP 2b. Consider the following rates of change (%) for each of the above items. % change PCE 10.70% GPDI -5.00% NX -6.80% GOV 6.30%
8
Suppose the consumption function is given by C(Y) = 50+0.5 (Y-T), where Y represents income and T represents net taxes. Suppose that the level of government expenditure, G, is 200; net taxes, T, are 200; planned investment, I, is 400. 1)The government expenditure multiplier is: a. -2 b. -1 c. 2 d. 1 The equilibrium level of output is: a. 850 b. 1500 c. 900 d. 1100
Please no written by hand and no emage Suppose that in the economy under consideration the consumption function can be written as C = 200 + .8(Y – T). Furthermore, you know that taxes are autonomous and equal to $10. Now, suppose that investment spending is equal to $50 at every level of disposable income and government spending is constant and equal to $100 at every level of disposable income, suppose that (X – M) is constant and equal to $20 at every level of disposable income. (a)Draw a graph of the consumption function with respect to disposable income. Measure/show consumption spending on the vertical axis and disposable income on the horizontal axis (b) Calculate equilibrium national income Ye from the information given. (c) From the information given above is the government running a deficit or surplus budget? Explain why. (d) Full employment output in this economy (Yf) is equal to $2000 what do you predict is happening to inventories if the full employment level of output is…
- If an economy is in equilibrium when national income is $1000, and the level of autonomous expenditure is $600, what is the value of the marginal propensity to withdraw? - Imagine an economy where autonomous expenditure is $50, and the equilibrium level of national income is $125. How much would autonomous expenditure have to increase by to achieve full employment output of $150 ?
The economy is characterized as: C=100+0.8Yd G=T =50 I=50-25i MS=200 P=1 Md=Y-25i Tax T=50 1. Is tax a lumpsump, specific, ad valorem or proportional tax? 2. What is the equilibrium income? 3. What is the total investment?
Assume that government purchases decrease by $10 billion, with other factors held constant, including the price level. Calculate the change in the level of the real GDP demanded for each of the following values of the MPC. Then, calculate the change if the government, instead if reducing its purchases, increased autonomous net taxes by $10 billion. a. 0.9 b. 0.8 c. 0.75 d. 0.6
The President of Westeros hires you as an economic consultant. He is concerned that theoutput level in Westeros is too high and that this will cause prices to rise. He feels that it isnecessary to reduce output by $10 billion. He tells you that the MPC in Westeros is 0.6.Which of the following would be the best advice to give to the Westeros president?A) reduce government purchases by $4 billionB) increase taxes by $10 billionC) reduce government purchases by $10 billionD) increase taxes by $2.5 billion
problems 2, 3, and 4 please
Song earns $148,000 taxable income as an interior designer and is taxed at an average rate of 20 percent (i.e., $29,600 of tax). Answer the questions below assuming that Congress increases the income tax rate such that Song's average tax rate increases from 20 percent to 25 percent. Required: What will happen to the government's tax revenues if Song chooses to spend more time pursuing her other passions besides work in response to the tax rate change and therefore earns only $111,000 in taxable income? What is the term that describes this type of reaction to a tax rate increase? What types of taxpayers are likely to respond in this manner?