An economy is initially described by the following equations:Y = C+I+GC= 59.+0.8(Y-T)...I= 125- 10r(M/P)d = Y-4orG = 150T 100M = 2,000P = 5Derive the functions of the IS curve and the LM curve. Calculate%3Dа.the equilibrium interest rate and income.b.Suppose a newly elected president cuts taxes by 20%. Assumingthat the money supply is held constant, what are the new equilibriuminterest rate and income? What is the tax multiplier?C.Now assume that the central bank adjusts the money supply tohold the interest rate constant? What is the new equilibrium income? Whatmust the new money supply be?

Given: Y = C + I + GC = 50 + 0.8 (Y - T)I = 125 - 10r(M/P)d = Y - 40rG = 150T = 100M = 2,000P = 5…

Answered: An economy is initially described by…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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In the economy of Kwartengland, the following figures are given for economic activity which was undertaken in 2013. All the figures are million Ghana Cedis Consumption Expenditure = 1000 + 0.8 YD Investment Spending= 600 Government Expenditure = 2450 Personal Taxes= 100 Exports= 100 Imports= 150 1. Calculate the investment and tax multipliers 2. By how much should exports change if government wishes to increase real GDP by 1000?
An economy’s aggregate demand is specified as follows: C = 300 + 0.8Yd, Investment (Io) = 230, Taxes (T) = 120 + 0.2Y, Government final purchase = 400, Export (X) =240 and Import (M) = 400. Find the equilibrium national income? Find the value of the injections in this economy iii. How much withdrawals are when the economy is in equilibrium?
11. If the rightward shift of the IS curve is the result an increase in government spending the increase in the level of output from YO to Y2... a) b) is equal to the increase in government spending. is greater than the increase in government spending is smaller than the increase in government spending. c)
YAS = 742 + 15 P- 28Poil YAD = 478 - 45P + 18G Suppose initially, the Poil = $93 per barrel and government spending is equal to $630. %3D Part (a): Calculate equilibrium GDP and the price level. Part (b): Determine the magnitude of the multiplier if oil prices exogenously rise by $1. Part (c): Using 2 to 3 sentences, provide a theoretical explanation for why the multiplier you calculated in part (b) is smaller (in absolute value) than the simple multiplier. Hint: you should be mentioning how the price level impacts AE and AD variables. Part (d): Determine the magnitude of the multiplier if government spending exogenously increases by $1. Part (e): Using 2 to 3 sentences, provide a theoretical explanation for why the multiplier you calculated in part (d) is smaller than the simple multiplier. Hint: you should be mentioning how the price level impacts AE and AD variables.
Assume consumption is represented by the following function: C=400+0.75Y. Also assume that planned investment (I) equals 100 and there are no government or taxes.
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
QUESTION 36 1 Q = 1- mpc + mpc •t (C, +1+ G + X„) 1 AQ = 1- mpc+ mpc · t (AC, + AI + AG + AX„) | = 100, G = 200, Ca = 100, Xn -100, mpc = 4/5, t (income tax rate) = 1/4 36. Given this model, what is the equilibrium level of income? 125 300 500 750 1,000
he data below is for the small economy of Christodea in 2015. Consumption: C = 500 + 0.75Y, Net taxes: T = 20 + 0.2Y Planned investment: / = 525 Government expenditure: G = 800 Exports: X = 250 Imports: M = 260 + 0.1Y Calculate the following: a) Government wished to decrease unemployment by increasing national income by 200. How much must government expenditure increase in order to achieve this target? b) Assume an increase in government expenditure of 100 supported by a 100 increase in autonomous taxation, what would be the impact of this fiscal policy on national income? c) Calculate the following after the change in policy in e) above. i) Government budget position. ii) Balance on current account. i) Total consumption
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