ANSWER C, D, E FOR UPVOTE 4. Apply the classical theory. Consider a hypothetical economy described below:Y=C+I+GC = 50+ c(Y - T)I = 300-20rY = 2,000T = 900G = 1,500c = 0.6where Y is output, C is consumption, I is investment, G is government purchases, Tistaxes, and ris real interest rate in percent.c) Suppose taxes are reduced by 80. First, calculate private saving, public saving,and national saving. Second, find the new equilibrium interest rate. Third,draw a graph that shows the change in the equilibrium.d) Instead of reducing taxes by 80, suppose government purchases are increasedby 80. First, calculate private saving, public saving, and national saving.Second, find the new equilibrium interest rate. Third, draw a graph that showsthe change in the equilibrium.e) Why is the change in national saving larger in (d) than in (c) even if themagnitude of the change in fiscal policy in (c) and (d) are the same?

Given information C=50+c(Y-T) I=300-20r Y=2000 T=900 G=1500 C=0.6

Answered: 4. Apply the classical theory. Consider…

4. Apply the classical theory. Consider a hypothetical economy described below: Y=C+I+G C = 50+ c(Y - T) I = 300-20r Y = 2,000 T = 900 G = 1,500

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: Calculate profits given:- Total revenue = $10,000 Total cost = $7700

A: The data presented in the question above is:- Total revenue = $10,000 Total cost = $7700 Using this…

Q: If a firm has an accounting profit it must have an economic profit. O True

A: Profit = total revenue - total cost

Q: Use the following table to ccalculate TFC - keep your calculation for follow up questions: Total…

A: Fixed cost is the cost that is not affected by the level of production of a firm; it is a cost that…

Q: WORLD VIEW Tesla Starts Rolling Out Cars from Shanghai Gigafactory Elon Musk gambled a fortune in…

A: AFC refers to fixed cost per unit of output it is found out by dividing the total fixed cost by the…

Q: Asap Total cost can be divided into two types. What are those two types? Select one: a. fixed…

A: Costs refers to the all type of expenses that incur in the process of production of goods and…

Q: PLS HELP ASAP ON BOTH

A: An important way to gauge change in your business environment is to Review industry association…

Q: stands Tor as for reating exceptional customer experience each time a customer interacts with the…

A: A supply chain management (SCM) system controls the flow of goods, data, financials, and information…

Q: After one month of operation, UCC Cafe decided to shorten its business hours and close on weekends.…

A: When UCC cafe reduced business hours and weekends holiday. It considered variable cost.

Q: from the given data Q = 100, P=$12, ATC = $10, AVC = $4. find Average fixed cost and Total Profit…

A: Cost(C) refers to the monetary and non-monetary expenditure(E) incurred by a producer on the factor…

Q: Felix's only variable cost. Felix has a fixed cost of $80 per day and pays each of his workers $120…

A: The concept of MC can be explained as a cost that shows the type of cost that an individual,…

Q: Define returns to scale and it's all aspects.

A: Returns to scale Returns to scale refers to the proportionality of changes in output when all inputs…

Q: As a manager which do you think should you consider accounting profits or economic profits? why?

A: Cost of production is the monetary value incurred in the process of production on factors used in…

Q: Graph the ATC and MC below and explain

A: The marginal cost (MC) represents the additional costs incurred in producing one extra unit of the…

Q: What does average fixed cost fall with increase in output?

A: Fixed cost per unit of output is known as average fixed cost. Because the same amount of fixed costs…

Q: Define Fixed Cost and provide an example.

A: A company's fixed expenses are critical. Profit forecasting and calculating the break-even point are…

Q: (a) What is meant by a firm's expansion path? (b) Name and explain the curve that can be produced…

A: Expansion path could be a graph which shows how a firm's cost minimizing input mix changes because…

Q: The most efficient scale of production is where at which point?

A: According to the given question In simple words we can say that scale of production basically or…

Q: Write a short note on Increasing economies of scale – meaning and effect on costs

A: The production function depicts the technical association between the quantities of output (Q) that…

Q: The rental of property is considered as a. increment cost b. fixed cost c. variable cost d.…

A: Costs refer to the amount that is incurred for using the factors of production to produce goods.…

Q: Is updating products to be better and different is considered an innovative product and thus…

A: Every firms have objective to make their profit Maximized and increase the market base . For that…

Q: 1. Mr. Wellington buys a new 66" television so he can watch LeBron James play some basketball. The…

A: Answer - Given in the question - Cost of television = $760 As cost of television is one time cost…

Q: How do you measure efficiency and rate of return? Show me by explaining the ratios used in this…

A: Return on investment (ROI) and rate of return (ROR): The rate of investment is a measure that is…

Q: How does the best price change as the unit variable cost changes?

A: A variable cost could be a corporate expense that changes in proportion to production output.…

Q: True or False T 1.→Profit-can be calculated without including fixed costs. 2. All-costs can-be…

A: HI Student, Thanks for posting the question. As per the guideline, we are providing answer for first…

Q: What equation shows the relationship of MC to AVC when AVC is rising?

A: Marginal Cost It refers to the change in the total cost due to one unit change in output. Variable…

Q: To make a decision about opening a restaurant, what is the relevant cost for Aram? $50 thousand has…

A: Explicit costs are ordinary business expenses that appear in the general ledger and have a direct…

Q: n 2004, Safari Corporation’s total sales reached $1.2 million. By 2010, sales had climbed to $4.25…

A: sales growth rate means the rate at which the sales is increasing per year. growth gives the trends…

Q: Do AC and AVC intersects each other?

A: Average cost measures the cost incurred by a firm per unit of output produced. Average variable cost…

Q: Expalin the law of diminishing returns or diseconomies of scales ?

A: In an economy, the law of diminishing returns and diseconomies of scale are two different concepts,…

Q: What’s law of diminishing returns

A: The law of diminishing returns would operate since the output would not expand at rising rates.

Q: Which average cost curves are U-shaped?

Question

ANSWER C, D, E FOR UPVOTE

4. Apply the classical theory. Consider a hypothetical economy described below:
Y=C+I+G
C = 50+ c(Y - T)
I = 300-20r
Y = 2,000
T = 900
G = 1,500
c = 0.6
where Y is output, C is consumption, I is investment, G is government purchases, Tis
taxes, and ris real interest rate in percent.
c) Suppose taxes are reduced by 80. First, calculate private saving, public saving,
and national saving. Second, find the new equilibrium interest rate. Third,
draw a graph that shows the change in the equilibrium.
d) Instead of reducing taxes by 80, suppose government purchases are increased
by 80. First, calculate private saving, public saving, and national saving.
Second, find the new equilibrium interest rate. Third, draw a graph that shows
the change in the equilibrium.
e) Why is the change in national saving larger in (d) than in (c) even if the
magnitude of the change in fiscal policy in (c) and (d) are the same?

Expert Solution

This question has been solved!

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

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps with 2 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

How do you find total fixed cost?
As a start-up, why do you need to learn how to create your own business plan? Why is it significant?
Typed and correct answer please. I will rate accordingly. Don't do wrong please. It's my last attempt.
Find the attached file.
Do AC and AVC intersects each other?
Hi, just wanted to ask why the simplification changes x(V-x^2/2) to (1-x)*(V-x^2/2)
A student once said she 'didn't believe in sunk costs. She meant that the idea that 'some costs are sunk and shouldn't be accounted for in making decisions' didn't make sense and that all costs associated with a project were important. Do you think the concept of sunk costs is important to business decision-making? Why or why not?
Suppose that you want to open a new business or purchase an existing one. Describe that business. What good or service would you provide? Where would you be located? What would be some explicit costs of starting the business? What would be some implicit costs?
Describe the unit-of-production method?
a software production firm, average product has started falling and total output indicated diminishing trend. The production manager Mr. Yahya called you and asked you to see the condition of marginal product. You analyzed the situation and reported that marginal product falling more than average product. Mr. Yahya got surprised. In your opinion which situation the firm is heading to?
Question 8 page 28 Janet spends $20,000 per year on painting supplies and storage space. She recently received two job offers from a famous marketing firm- one offer were for $100,000 per year, and the other was for $90,000. However, she turned both jobs down to continue a painting career. If Janet sells 25 paintings per year at a price of $8,000 each: a. What are her accounting profits? Show your steps leading to your answer b. What are her economic profits? Show your work!
in your own personal life, what are some fixed and variable costs you have?