9. Suppose the economy is characterized by the following behavioral equations: C=co+c₁YD YD=Y-T I = bo + b、Y where co=480, c₁ = 0.5, to= 80, t₁ = 0.25, G = 120, bo=200, and b₁ = 0.25. What is the (income) multiplier for this economy? a. 4 b. 3 c. 2 d. 1 e. All of the answers here are incorrect

9. Suppose the economy is characterized by the following behavioral equations: C=co+c₁YD YD=Y-T I = bo + b、Y where co=480, c₁ = 0.5, to= 80, t₁ = 0.25, G = 120, bo=200, and b₁ = 0.25. What is the (income) multiplier for this economy? a. 4 b. 3 c. 2 d. 1 e. All of the answers here are incorrect

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter6: Consumer Choices

Section: Chapter Questions

Problem 9RQ: If people do not have a complete mental picture of total utility for every level of consumption, how...

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3) Suppose the economy is closed and is characterized by the following behavioral equations: C=C₁₂ +G₁Y₂ Y₂=Y-T 1=b₂ + b₂Y a. Government spending and taxes are constant. Solve for the equilibrium output. b. What is the value of the multiplier? How does the relationship between investment and output affect the value of the multiplier as compared to the case when investment was exogenous? For the multiplier to be positive what condition must ( + b) satisfy? Explain your answers? bo C. Suppose that the parameter sometimes called business confidence, increases. How will the equilibrium output be affected? Will investment change by more or less than the change in bo? 'Why? What will happen to national saving?
6) Suppose the economy is closed and is characterized by the following behavioral equations: C=C₁+C₁YD Y₁ = Y-T I=b₁ + b₂Y a. Government spending and taxes are constant. Solve for the equilibrium output. What is the value of the multiplier? How does the relationship between investment and output affect the value of the multiplier as compared to the case when investment was exogenous? For the multiplier to be positive what condition must (c₁ +b₁ ) satisfy? Explain your answers? b. Suppose that the parameter bo, sometimes called business confidence, increases. How will the equilibrium output be affected? Will investment change by more or less than the change in bo? Why? What will happen to national saving?
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3 Use Lagrange multipliers to find expressions for x, and x, which maximize the utility function U =x}? + x}? subject to the general budgetary constraint Px, + Px, = M
4) Suppose the economy is closed and is characterized by the following behavioral equations: a. b. C. d. C=C₂+GY₂ Y₂ = Y-T 1=b₂ + b₂Y Government spending and taxes are constant. Suppose that consumers decide to consume less (and therefore to save more) for any given amount of disposable income. Specifically assume that consumer confidence () falls. What will happen to output? As a result of the effect on output you determined in part (a), what will happen to investment? What will happen to public saving? What will happen to private saving? Explain. What is the effect on consumption? Suppose that consumers had decided to increase consumption expenditure, so that Co had increased. What would have been the effect on output, investment, and private saving in this case? Explain. What would have been the effect on consumption? Comment on the following logic: "when output is too low, what is needed is an increase in demand for goods and services. Investment is one component of demand, and…
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Elements of Mathematical Economics
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Use the graph to answer the following: (a) At the optimal consumption point, approximately how many armadillos will be consumed? (b) Approximately how many apricots will be consumed? (c) If this consumer spent all of his income on armadillos, how many armadillos could he buy? (d) If his income decreased, what would it look like? Draw the appropriate shift on the graph.
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