Consider a closed economy where the full-employment level of output is 1000. Its desired consumption and desired investment is cd = 300 - 2000r + 0.5(Y-T) and d = 500 - 3000r, respectively. Taxes T are 20% of output (ie, T=0.2Y). The government's G is 200 The real money demand is captured by MP = 200 + 0.2Y - 2000(r+n). The nominal money supply is 300. The expected inflation m* is 4%. Which of the following is closest to the level of price (P) in the general equilibrium? O a. 1.7 cross o Ob. 19 cross ou Oc. 2 cross ou Od. 22 cross ou

Consider a closed economy where the full-employment level of output is 1000. Its desired consumption and desired investment is cd = 300 - 2000r + 0.5(Y-T) and d = 500 - 3000r, respectively. Taxes T are 20% of output (ie, T=0.2Y). The government's G is 200 The real money demand is captured by MP = 200 + 0.2Y - 2000(r+n). The nominal money supply is 300. The expected inflation m* is 4%. Which of the following is closest to the level of price (P) in the general equilibrium? O a. 1.7 cross o Ob. 19 cross ou Oc. 2 cross ou Od. 22 cross ou

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

I need help soon as possible please
Consider a keynesian macromodel Y=(C0+G+I) / (1-c) where C0 is autonomus consumption, G is government consumption expenditure, I is investment expenditure, c is the marginal propensity to consume. Assume constant marginal productivity of labor. What will be the result of an increasing government consumption expenditure in this module, if not other paramiters are changed? a. Lower investment. b. Higher employment. c. Higher inflation. d. Lower employement.
What does the intersection of the AD and AS curves signify? Contrast the shor-turn aggregate supply (SRAS) curve from the long-run aggregate supply (LRAS) curve. (11.2)
Suppose that in a closed economy in which l = Y with Y,=5000,C=500+0.5(Y* T) and T-1000 the government decides to increase taxes ( top) permanently by 500. We know that in the medium-run: 1. S will decrease by 150. 2. S will decrease by 350, 3. S will decrease by 250. 4. S will remain constant in the medium-run.
Desired consumption is Cd = 100 + 0.8Y - 500r - 0.5G, and desired investment is I d = 100 - 500r. Real money demand is Md/P = Y - 2000i. Other variables are: expected inflation = 0.05, G = 200, y
In a hypothetical economy, real GDP is $10 trillion, investment is $2 trillion, the capital stock is $20 trillion, the depreciation rate is 4.5% and the labor supply growth rate is 1%. Which statement is correct? Capital per worker is increasing in this economy Aggregate demand is decreasing in this economy Aggregate demand is increasing in this economy Capital per worker is decreasing in this economy
I. Taiwan has an income tax rate, t1, of 28% and a Marginal Propensity to Save (MPS) of 0.4. It is in Eqm but is currently suffering from an "inflationary gap" of $350 m. (that is, Eqm Y>Y full employment, FE, aka Yn). Make the necessary calculations for the to policy that should be instituted. Provide the full name of this policy. II. Most economists believe that tariffs are not the best way to reduce the US trade-balance deficit -- the fact that US IM>US X. (Macro problems should be fixed with macro tools and tariffs are a micro tool.) Derive the identity for Y from the expenditure approach for an open economy to discuss what it means when a country is running a trade-balance deficit and whether it is an economic "good" or "bad." Then derive the twin-deficit identity and use it to explain why the US runs trade-balance deficits and what can be done, if anything, to reduce them. Make all your assumptions clear.
What is inflationary gap? Select one: When aggregate expenditures are greater than the full employment level causing a demand pull-inflation When aggregate expenditures are greater than full employment level causing cost push inflation None of the options are correct It is the gap between a developed nation GDP and an under-developed/ developing nation GDP When aggregate expenditures are inadequate to bring about a full employment level
In a certain year the aggregate amount demanded at the existing price level consists of $100 billion of consumption, $40 billion of investment, $10 billion of net exports, and $20 billion of government purchases. Full-employment GDP is $200 billion. To obtain full employment under these conditions the government should: encourage personal saving by increasing the interest rate on government bonds. decrease government expenditures. reduce tax rates and/or increase government spending. discourage private investment by increasing corporate income taxes
State whether True/false.
Question 13 Include correctly labeled diagrams, if useful or required, In explaining your answers. A correctly labeled dl question prompts you to 'Calculate," you must show how you arrived at your final answer. Vander's economy is in short-run equilibrium with an inflationary gap of $360 billion, and the marginal propensity to save 0.1. the expected inflation rate is 2% and the natural rate of unemployment is 4% (b) Assume the government takes no policy action with regard to the state of Vander's economy. (i) What will happen to the actual rate of unemployment in the long run? Explain.(it) The flow will the long-run adjustment process be represented in the Phillips curve model? Explain. (c) Assume that instead of waiting for the long-run adjustment, the government of Vander is considering USA fiscal policy to addresses the inflationary gap of 360 billion(ii) How will the effect of the government's action in part (c)(i) be represented in the Phillips curve model(Ili) If the government…
25