a. If investment is x, draw the aggregate expenditure function (which depicts total consumption plus investment for every level of income). Include in your graph the original consumption function and the aggregate expenditure function. b. If investment is x, mathematically determine the equilibrium level of income. (Hint: remember the equilibrium condition and note that the equilibrium level of income will be a function of x, the investment amount) c. If investment increases by 100: i. ii. Determine the change in equilibrium income using the multiplier effect. Determine the change in your equilibrium income using the equilibrium you derived from (b). Are your answers the same? Now, enter a government that levies a tax on the consumers. The economy is still closed. Now, disposable income equals income minus taxes. d. If government spending is 500, taxes are t, and investment is x, determine the equilibrium level of income. (Hint: remember the equilibrium condition that desired spending = income, and remember that disposable income equals income minus taxes, now, your equilibrium income will be a function of x and t)

a. If investment is x, draw the aggregate expenditure function (which depicts total consumption plus investment for every level of income). Include in your graph the original consumption function and the aggregate expenditure function. b. If investment is x, mathematically determine the equilibrium level of income. (Hint: remember the equilibrium condition and note that the equilibrium level of income will be a function of x, the investment amount) c. If investment increases by 100: i. ii. Determine the change in equilibrium income using the multiplier effect. Determine the change in your equilibrium income using the equilibrium you derived from (b). Are your answers the same? Now, enter a government that levies a tax on the consumers. The economy is still closed. Now, disposable income equals income minus taxes. d. If government spending is 500, taxes are t, and investment is x, determine the equilibrium level of income. (Hint: remember the equilibrium condition that desired spending = income, and remember that disposable income equals income minus taxes, now, your equilibrium income will be a function of x and t)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The economy is in equilibrium such that Planned Aggregate Expenditure (AE) = Aggregate Output (Y) = 1,200. We have earlier observed that when Y increased from 900 to 1,200 Aggregate Consumption (C) increased from 800 to 1000. If investments increase by 55, how much will Aggregate Income change from its current value of 1,200? 110 82.5 165 1,365 1,310
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
If the output level is such that the Y=AE line (45-degree line) is below the aggregate expenditure line, which of the following is true? a Aggregate expenditure is greater than output, so inventories will decrease and output will increase. b Aggregate expenditure is less than output, so inventories will increase and output will decrease. c Aggregate expenditure is less than output, so inventories will decrease and output will increase. d Aggregate expenditure is greater than output, so inventories will increase and output will decrease.
Refer to Table 1. The equation for the aggregate consumption function is C = 200 + 0.3Y. C = -200 + 0.2Y. C = 200 + 0.8Y. C = 200 + 0.75Y.
For the following problem, assume that the MPC, b, takes into account how much consumers spend as total income (Y) in the economy is changes. (Also: Hint GDP = Total Y) So we can rewrite our consumption function as :C= a +bYAssume:a= $2900 billionb=.75GDP= $9,000 billion.A) What is C=B) What is S=C) If consumers were the only ones buying goods in the economy, would the economy have an excess supply of goods, excess demand of goods or would the economy be at equilibrium ?
3. For the following problem, assume that the MPC, b, takes into account how much consumers spend as total income (Y) in the economy is changes. (Also: Hint GDP = Total Y) So we can rewrite our consumption function as : C= a +bY Assume: a= $2900 billion b=.75 GDP= $9,000 billion. A) What is C= B) What is S= C) If consumers were the only ones buying goods in the economy, would the economy have an excess supply of goods, excess demand of goods or would the economy be at equilibrium ?
Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.
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Consumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case a) Find the equilibrium national income. b) Find the multiplier coefficient and interpret the meaning it expresses. c) Find the equilibrium consumption amount. d) Find the equilibrium saving amount. e) How much does the equilibrium national income change if i = 100? f) If C = 0.85, how would the equilibrium national income change? Explain. g) If C = 0.85, how would the equilibrium saving amount change? Explain
Question 2 Refer to the information provided in Figure 23.9 below to answer the question(s) that follow. Aggregate expenditures ($ millions) 225 200 175 150 45° AE 100 200 300 Aggregate output ($ millions) Figure 23.9 a) Refer to Figure 23.9. Write the equation for the aggregate expenditure function (AE). Show your work. b) Refer to Figure 23.9. What is the equilibrium level of output in this economy? State the equilibrium condition used to determine this. c) Explain the forces that maintain/drive the economy to this equilibrium by considering what will happen at the following two levels of output, $300 million and $100 million. You will need to discuss changes in investment through unplanned inventories and the response of output. d) Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million? e)The interest rate is an exogenous factor that effects the level of investment in an economy.…
Suppose that country Y is identical to country Z, with the exception that country Y's population has a lower marginal propensity to consume than country Z. Initially, both countries have the same level of real GDP. The diagram shows the expenditure curve for country Y. Using the line drawing tool, draw the expenditure curve of country Z in Figure 1. Label your curve 'Ez'. Carefully follow the instructions above and only draw the required object. Figure 1 Planned Expenditure ($, trillions) Real GDP, Y ($, trillions) Ex Select ✓ Line
Moving to another question will save this response. Quèstion 23 Assume the following consumption schedule: C= 20 + 0.9 Y, where C is consumption and Y is disposable income. At $1,100 level of disposable come: (show your calculations) a Find out the level of saving and consumption? ( b. How much are the APC and APS (to one decimal place)? c. If disposable income increased to $2,800 and saving is $345 now. What are MPC and MPS (to two decimal places)? J For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). BIUS Paragraph Arial 10pt 三v 三v A v In X, 田田田国 ABC 三三 +, 旺困田田 |用