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Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T = 50 + 0.25Y. (Question 1 of 6) = What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)

Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T = 50 + 0.25Y. (Question 1 of 6) = What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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option:
a contractionary
a decrease in government spending
A decrease in taxes
an expansionary
an increase in government spending
an increase in taxes
inflation
targeting a higher federal funds rate
targeting a lower federal funds rate
the purchasing of government securities in the open market
the sale of government securities in the open market
unemployment 

Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T=50 +0.25Y. (Question 1 of 6) What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)
Transcribed Image Text:Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T=50 +0.25Y. (Question 1 of 6) What is the current equilibrium level of GDP (in millions of dollars)? (report your answer at 3 decimal places)
Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T = 50+ 0.25Y. (Question 2 of 6) Consider that actual rate of unemployment is 5 percent and the current government decides to implement a monetary policy to stabilize the current economic environment. What can be said about the government's policy? (complete the sentences below) Given the current macroeconomic condition, one can conclude that the government's primary concern is policy to be any combination of and they intend to implement monetary policy to stabilize the economy. One would expect the monetary ✓ and
Transcribed Image Text:Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: I = 60 + 0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 +0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T = 50+ 0.25Y. (Question 2 of 6) Consider that actual rate of unemployment is 5 percent and the current government decides to implement a monetary policy to stabilize the current economic environment. What can be said about the government's policy? (complete the sentences below) Given the current macroeconomic condition, one can conclude that the government's primary concern is policy to be any combination of and they intend to implement monetary policy to stabilize the economy. One would expect the monetary ✓ and
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