(b). Consider an economy described by the following equations Y =C+I+G Y = 5000; G = 1000; T = 1000; C = 250 + 0.75 (Y-T); I = 1000-50r (? --- cqu. ii) Now suppose that G rises to 1,250, compute: (1) National savings, (2) The new interest rate.

(b). Consider an economy described by the following equations Y =C+I+G Y = 5000; G = 1000; T = 1000; C = 250 + 0.75 (Y-T); I = 1000-50r (? --- cqu. ii) Now suppose that G rises to 1,250, compute: (1) National savings, (2) The new interest rate.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(b). Consider an economy described by the following equations (1 Y =C +I+G Y = 5000; G = 1000; T = 1000; C = 250 + 0.75 (Y-T); I = 1000-50r i) In this economy: (1) Compute national savings (2) Find equilibrium interest rate.
f in a given situation, Px = 150, Pm = 180 Zx = 160 , and , then which of the following will be the value of Single Factorial Terms of Trade (Ts) ?
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If in a given situation, Px = 150, Pm = 180 Zx = 160 , and , then which of the following will be the value of Single Factorial Terms of Trade (Ts) ?
Optimizing economic agents use the real interest rate when thinking about the economic costs and returns of a loan. Suppose the average rate paid by banks on savings accounts is 0.75% at a time when inflation is around 1.65%. For the average saver, the real rate of interest on his or her savings is .......???%. (Round your response to two decimal places and use a minus sign if necessary.) If banks expect that the rate of inflation in the coming year will be 4.65% and they want a real return of 7.5% on a certain category of loans, then the nominal rate they should charge borrowers on those loans is .......???%. (Round your response to two decimal places.) If the economy experiences an unexpectedly low rate of inflation, the group that would tend to benefit is ___________. A. debtors (people or businesses who owe money). B. creditors (people or institutions that are owed money). C. both would benefit equally. D. neither benefits.
Q1. Suppose the consumption function in the United States economy is represented by the following equation: C = 200 + .5 YD, where Y₁ = Y - T and T = 200. (a) What is the level of consumption in this economy if Yo = 0? Briefly explain how individuals "pay for" this consumption when Y₁ = 0. (b) Given the above parameters, calculate the level of consumption if Y = 1200. (c) Suppose Y increases to 1300. What happens to the level of Yo as Y increases to 1300 (i.e. calculate the change in YD)? (d) What happens to the level of consumption when Y rises to 1300 (i.e. calculate the change in consumption)? (e) Using the change in Yo and the change in consumption you calculated, what is the marginal propensity to consume (MPC) for this economy? Is this the same as the parameter of the consumption function that represents the marginal propensity to consume? (f) Write out the saving function for this economy. (HINT: S = Yo - C. Substitute for C from the information above and simplify the right side…
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Evample 27. If saving function for an economy is given as: S =-500 + 0.2Y and investment expenditure is R 100 crores, then determine: (i) Level of income when saving will become zero; i) Level of income when saving is equal to investment.
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B. Explain the following functions , and establish the independent variable for the function I=f(r)& the dependent variable for the function I=f(y+1- Yt) , where r is the interest rate and Y is the national income 2