An economy has government purchases of 1000. Desired national saving and desired investment are given by = 200 + 5000 r+ 0.10 Y-0.20 G A- 1000 - 4000 r When the full-employment level of output equals 5000, then the real interest rate that clears the goods market will be O 16.67%. 1.11% 5.56%. 21.11%
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- Who benefits from an increase in interest rates? O people who are borrowing money no one O people who are saving money O everyone Previous Next ASUS f6 19 & 5 8 近The diagram below show the market for financial capital assuming that national income is constant at potential GDP, Y*. Real Interest Rate FIGURE 2 NSO I* 11 12 13 NS1 1 1 ID Quantity of Investment and Saving ($) Refer to Figure 2. Suppose national saving is reflected What is the effect in the market for financial capital? NS, and investment demand is reflected by loº. Now suppose the vernment implements a policy that increases investment tax credit. Select one: O a. Investment demand shifts to 1₁P and the quantity of national saving supplied rises to 1₁. O b. National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises to 1₁. O c. National saving shifts to NS₁, and the quantity of national saving supplied rises to 1₂. O d. There is no effect on NS or IP and the quantity of national saving supplied remains at I*. O e. Investment demand shifts to I₁P, national saving shifts to NS₁, and the quantity of national saving rises to 13.QUESTION 5 An economy has full-employment output of 1,400. Government purchases are 280. Desired consumption and desired investment are given by = 268 - 600, + 0,4Y jd = 352 - 400r where Y is output and r is the expected real interest rae. Find the desired saving function with respect to the real interest rate. Use all given information. Show all work to derive S TTT Arial 3 (12pt) Path p Words:0 QUESTION 6
- 4. An economy has government purchases of 1000. Desired national saving and desired investment are given by gd=200+5000r+0.10Y-0.20G jd=1000-4000r When the full-employment level of output equals 5000, calculate the real interest rate that clears the goods market.Suppose that conditions in the economy are such that the after-tax expected real interest rate is described by the equationRa = a X gWhere a is a number that depends on how people value their consumption in one period compared with another period, and g is the growth rate of the economy. The a equals 1 when people prefer consumption to be balanced, with the same amount of consumption each period; a may be bigger than the one when people prefer consumption today over consumption in the future, with a being larger and larger the more impatient people are:A - Suppose that a = 2, g = 0.02, the inflation rate is expected to be steady at pi = 0.03, and the tax rate is .40. What are the values of the equilibrium nominal interest rate and the before-tax expected real interest rate?B - Beginning with the situation in part a, if the growth rate of the economy increases to .04, what are the new values of the equilibrium nominal interest rate and the before-tax expected real interest rate?C-…Real Interest Rate 1₂ 1. 4 FIGURE 25-2 1 11 12 13 -10 Quantity of Investment and Saving (5) Refer to Figure 25-2. Suppose national saving is reflected by NS, and investment demand is reflected by Now suppose the government implements a policy that encourages investment. What is the effect in th market for financial capital? Select one: a. National saving shifts to NS₁, investment demand shifts to 1₁D, and the quantity of national saving rises t b. There is no effect on NS or ID and the quantity of national saving supplied remains at I". c. National saving shifts to NS₁, and the quantity of national saving supplied rises to 12. d. Investment demand shifts to 1₁D and the quantity of national saving supplied rises to 1₁. e. Investment demand shifts to 1₁D, national saving shifts to NS₁, and the quantity of national
- If C = 32 + 0.90Y, how much would an individual save when income is 953? Select one: O a. 63.30 О Б.-825.7О О с. 889.70 O d. 825.70Assume that in 2016, the followng prevals n the Republic of Nurd Goverment spending (0) 50 Not taxos (T)- 50 Planned investment - S30 Assume that househoids in Nurd censume 75 percent of heir income, they save 25 percent of their income. Thun, the consumption function and saving function of Nurd re C-075Y, and S=025Y. where disposabile income YY-T Determine the equilitrium level of income Equilibrium income =$(Enter your reaponse as an integer.)QUESTION 14 Expenditures, Income Price level 60 50 40 30 20 10 80 70 60 50 40 30 20 10 0 0 0 10 Qe Qf0 40 50 LRAS 10 Qe20 Qf 30 O (d) All the above. O (e) Only (a) and (b) are true O (f) None of the above. AE1 AE* ΑΕo real GDP = Q ADO AS AD1 40 50 real GDP = Q 14. Which of he following statements accurately explain the scenario illustrated by these diagrams? O (a) Assuming ADo and AEo are the original positions of the AD and AE curves respectively, the original situation illustrated is a recessionary gap of 10. O (b) To restore full-employment equilibrium Aggregate Expenditures must be increased to AE1 which is equivalent to shifting the AD curve to AD1 O (c) Because the short-run Aggregate Supply (AS) curve is upward sloping, the shift in AD will be associated with some products price inflation. This will cause the AE curve to decline from AE1 to AE* because of the wealth, interest rate, and trade effects of inflation.
- Suppose that conditions in the economy are such that the after-tax expected real interest rate is described by the equationRa = a X gWhere a is a number that depends on how people value their consumption in one period compared with another period, and g is the growth rate of the economy. The a equals 1 when people prefer consumption to be balanced, with the same amount of consumption each period; a may be bigger than the one when people prefer consumption today over consumption in the future, with a being larger and larger the more impatient people are:D - Beginning with the situation in part a, if the expected inflation rate declings to 0.01, what are the new values of the equilibrium nominal interest rate and the before tax expected real interest rate?E - From these results, what general conclusions can you draw about the relationship between the nominal interest rate and the rate of economic growth, the tax rate, and the inflation rate? what about the relationship between the before…The diagram below show the market for financial capital assuming that national income is constant at potential GDP, Y*. Real Interest Rate I EL ME 14 FIGURE 25-2 NSO I 11 12 13 NS1 1 1 Quantity of Investment and Saving ($) Refer to Figure 25-2. Suppose national saving is reflected by NS, and investment demand is reflected by lo. Now suppose the government implements a revenue-neutral tax policy that encourages investment. What is the effect on the real interest rate? Select one: O a. There is no effect on NS or ID, and the interest rate remains at i*. O b. The real interest rate rises because of the decrease in the budget surplus. O C. National saving shifts to NS₁, and the real interest rate falls to i3. O d. Investment demand shifts to 1₁D, and the real interest rate rises to i₂. O e. The real interest rate falls because of the decrease in the budget surplus.To the nearest 0.01, what is the present value of each of the following income streams (expressed in unitsof consumption goods), when the real interest rate is r =5%, and when the real interest rate is r =1%?c) m1 =−100, mt =100 for all t =2,...,∞