7) Suppose an economy is given by the following equations: C = 100+ 0.75Yd I = 125 - 5i G = 100 T = 100 (M/P) = 50 Y L(i) = 0.1Y - 2i Yn = 525 (Yn is the natural level of output) Using the above information, answer the following. (a) Derive the IS and LM curves. (b) Find equilibrium Y and equilibrium i. Is the economy in a recession or a boom? What policy should the Government (administration) pursue? Explain your answer specifically explaining what information leads you to think the economy is in a boom or a recession.

7) Suppose an economy is given by the following equations: C = 100+ 0.75Yd I = 125 - 5i G = 100 T = 100 (M/P) = 50 Y L(i) = 0.1Y - 2i Yn = 525 (Yn is the natural level of output) Using the above information, answer the following. (a) Derive the IS and LM curves. (b) Find equilibrium Y and equilibrium i. Is the economy in a recession or a boom? What policy should the Government (administration) pursue? Explain your answer specifically explaining what information leads you to think the economy is in a boom or a recession.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose you are the only producer and consumer in the economy and the only constraint you face is time. You produce a apple in an hour, if you do not make a production, you enjoy your time as a leisure time. You derive utility from both consuming the apple and consuming the leisure time. Suppose there are T hours to be used for both leisure and production. Additionally suppose that you are provided with m ( > 0 ) apple in each day by the government. ( Consumption does not take time) i) Please draw the budget constraint and budget set you face ii) Suppose that you become able to produce two apples in an hour but the number of apple provided everyday by government dropped to m-2 ( m > 2). Could you please draw budget set and budget constraint under new settings? (This scenario is valid only for this question) iii) Suppose that if you use ȟ (< T) hours of leisure (MULeisure / MUapple ) = 1 and if you use more than ȟ hours for leisure (MULeisure / MUapple ) < 1, and if…
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5. Recall the supply and demand example from notebook 1. p= 2q + 10 p= 30-q Express this system as a matrix equation using Markdown and solve using the inverse function in Numpy. Now, shift the demand curve 5 units to the right. Solve for the new equilibrium and graph using the econplot function from notebook 1.
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Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to “Calculate,” you must show how you arrived at your final answer. Assume that sugar-based soft drinks are produced in a market shown on the graph above. Answer the following questions based on the information given in the graph. (a) To reduce the consumption of sugary soft drinks, suppose the government imposes a $2 per-unit sales tax on soft drinks. (i) Will the price of soft drinks increase by the full amount of the sales tax? Explain. (ii) Calculate the tax revenue the government can collect from the sale of soft drinks. Show your work. (iii) Will the consumer surplus increase, decrease, or stay the same after the tax? (iv) Calculate the deadweight loss created by the tax. Show your work. (b) Suppose that instead of imposing the per-unit sales tax,…
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Note: Dashed drop lines will automatically extend to both axes. OFFEE (Millions of pounds) 32 28 COFFEE (Millions of pounds). 24 20 16 0 32 28 24 20 16 0 PPF 4 12 PPF 0 The following graph shows the same PPF for Sylvania as before, as well as its initial consumption at point A. As you did for Candonia, place a black point (plus symbol) on the following graph to indicate Sylvania's consumption after trade. (?) 4 O True 8 O False Candonia 4 12 20 16 GRAIN (Millions of pounds) 24 Sylvania 12 20 16 GRAIN (Millions of pounds) 28 24 32 28 Consumption After Trade 32 (? + Consumption After Trade True or False: Without engaging in international trade, Candonia and Sylvania would have been able to consume at the after-trade consumption bundles. (Hint: Base this question on the answers you previously entered on this page.)