Assume that the economy can be defined bythe following set of equations:C = 100 + 0.2 Yd (where C is consumption andYd is disposable income)| = 500 – 30r (where I is investment and r = 5units)G = 0.2 Y (where G is governmentexpenditure and Y is income)Assuming that government maintains abalanced budget policy (i.e., G =T)Find the investment multiplier:А.30В.-30С.46.9D.-46.9%3D

Equilibrium level of income is determined by equating national income (Y) to sum of aggregate…

Assume that the economy can be defined by the following set of equations: C = 100 + 0.2 Yd (where C is consumption and Yd is disposable income) |= 500 – 30r (where I is units) G = 0.2 Y (where G is government expenditure and Y is income) Assuming that government maintains a balanced budget policy (i.e., G =T) Find the investment multiplier: investment and r = 5

Assume that the economy can be defined by the following set of equations: C = 100 + 0.2 Yd (where C is consumption and Yd is disposable income) |= 500 – 30r (where I is units) G = 0.2 Y (where G is government expenditure and Y is income) Assuming that government maintains a balanced budget policy (i.e., G =T) Find the investment multiplier: investment and r = 5

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Suppose that the marginal propensity to save is dS = 0.29 dy (in billions of dollars) and that consumption is $8.9 billion when disposable income is $0. Find the national consumption function. C(y) =
Suppose that initially equilibrium income was 200 units and that this was also the full employment level of income. Assume that the consumption function is C=25+0.80YD and that, from the initial equilibrium level of income, we have now investment decline of 8 units? What will be the new equilibrium level of income? What increase in government spending would be required to restore income to the initial level of 200? Alternatively, what reduction in tax collection would be sufficient to restore an income level of 200?
Suppose output and income is equal to 16100, the marginal propensity to consume is 0.65, and autonomous consumption is 675. Calculate total saving for this economy, assuming no public or foreign sector. (Round your answer to the nearest whole number.)
Suppose the consumption function is given by C(Y)=60+0.8(Y-T) where Y represents output and T stands for net taxes. Suppose further that the level of investment, I, is 400, the level of government expenditure, G, is 300, and net taxes, T, are 200. What is the value of the marginal propensity to save? a. 5 b. 0.2 c. 0.8 d. 1
Consider the following consumption function: C (Y)=0.8(Y-T) where Y represents income and T represents net taxes. Suppose that investment, I, is 100; government spending, G, is 200; and, net taxes, T, are 100. 1)The equilibrium level of output is: a. 1200 b. 900 c. 1100 d. 1000 Tha values for the government expenditure and tax multipliers are, respectively: a. 5 and -4 b. -2 and 2 c. 2 and 2 d. 2 and 4
What will the multiplier be when the MPS is 0, 0.4, 0.6, and 1? What will it be when MPC is 1, 0.90, 0.67, 0.50, and 0? How much of a change in GDP will result if firms increase their level of investment by 8 billion and the MPC is 0.80? If the MPC instead of 0.67?
Given a consumption function, C = c0 + cY, specified such that the marginal propensity to consume is 75%, what will consumption expenditure be if total income is £538bn? a. £584+ c0 bn b. £403.5 + c0 bnc. £538 + c bnd. £403.5 bn
Suppose that a certain country has an MPC of .9 and a real GDP of $400 billion. If its investment spending decreases by $4 billion, what will be its new level of real GDP?
Suppose the consumption function is given by C(Y) = 50+0.5 (Y-T), where Y represents income and T represents net taxes. Suppose that the level of government expenditure, G, is 200; net taxes, T, are 200; planned investment, I, is 400. 1)The government expenditure multiplier is: a. -2 b. -1 c. 2 d. 1 The equilibrium level of output is: a. 850 b. 1500 c. 900 d. 1100
Suppose that the marginal propensity to save is ds = 0.25 (in billions of dollars) dy and that consumption is $5.05 billion when disposable income is $0. Find the national consumption function. C(y) =
In a private closed economy where MPC = 0.90, if consumers reduce their spending by $5 billion and firms cut investments by $4 billion, then equilibrium GDP will decrease by