Consider a three-period decision problem: max subject to the flow budget constraints for t = 0, 1, 2: bt+1 = (1+r)b₁ + Yt - Cr₂ u(co)+Bu(c)+3*u(cz) where bo is the initial wealth of the country. 1. Explain why in this three-period model it cannot be that b3 <0 and it should not be that b3 > 0.
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- u.edu.tr/mod/quiz/attempt.php?attempt=3214468&cmid%3D203021 Refer to the information provided in Figure 23.3 below to answer the question(s) that follow. amadı inden 270 miş 200 işaretle 130 60 450 100 200 300 Aggregate income (Y) Figure 23.3 Refer to Figure 23.3. The equation for the aggregate saving is Lütfen birini secin. O A S= -130 +0,4Y O B. S= 140 +05Y OC S= -80 +0.4Y ODS= -60 +03Y CES 200 +06Y Aggregate consumption (C)Consider the two-period model. The consumerís preferences over current and future consumption (c and c 0 ) are: REFER TO IMAGE FOR NEXT STEP (a) Find lifetime wealth, we. (b) Set up the Lagrangian and FINDd the optimal levels of current consumption (c), future consumption (c') and saving (y-t-c) c) Confirm that the allocation you found in part (b) is in fact optimal, by completing the following table. refer to second image(1)The following macroeconomic model describes the economy of Sunderland. 1. Y= C +I + G + NX 2. C = 220 + 0.63 Y 3. 1 = 1000- 2000R 4. G = Go 5. NX = 525-0.10Y-50OR 6. M (0.1583Y-1000R)P (a)ls it a fair characterization to refer to equation #2 as a "simple" consumption function? Explain. (b)Derive the expression for equilibrium real output, Y, for this economy. Note: In your final expression for Y, restrict coefficient values to three decimal points. (c) Suppose government spending is 1200 , money supply by the Central Bank is 900 and the price level is 1, find the value of GDP (Y) and equilibrium interest rate (R) for Sunderland. Income Identity Consumption function Investment function Government Expenditure Net export function Money market equilibrium (2)The questions in this section are related to the macroeconomic model of Sunderland. (a)The expression you are asked to derive in question #1b can be considered an aggregate demand curve. Do you agree? Explain your answer. (b)Sketch…
- 3. Analytic Question on Durable Consumption It is known that durable consumption is more sensitive to interest rates and expected income. In this question, we investigate if this is the case in the context of the model we have been studying. We investigate the following decision: U (c1, c2) 1 max {c1,c2} 2 VCi + xo + subject to the following budget constraints: The time 1 budget constraint: a = Y1 - Ci and the time 2 budget constraint: C2 = Y2 + (1 +r) a. The novelty is that ro is now a variable to represents past purchases of goods 1. You can think of this as a car. In turn, we have that x1 = c1 so a1 is consumption derived utility in period 2 derived from past purchases. For this question assume that B (1+ r) = 1. Answer the following questions. а. Substitute out a from both budget constraints, the one at time 1 and time 2, to write a single intertemporal budget constraint. b. Show that the Euler equation (the equation that relates the marginal utility of consumption to the interest…1. Complete the accompanying table with disposable income (DI) and consumption (C) schedules for a private, closed economy. All figures are in billions of dollars. DI Consumption Saving АРС APS MPC MPS 8. 40 40 80 72 120 104 160 136 200 168 240 200 (a) Refer to the above data. If plotted on a graph, the slope of the consumption schedule would be: (b) The break-even level of income is ($ ) where saving equals ( $ :). Households dissave ( $ ). Dissaving occurs at the lowest levels of income as households spend ( more, less ) than they receive in disposable income. This dissaving could occur with households liquidating (selling for cash) their assets or borrowing money. As income rises we see that savings ( increases, decreases ) by a greater and greater amount. (c) If consumption increases by $10 billion at each level of disposable income, the average propensity to consume (APC) will ( change, unchange) and/but the marginal propensity to consume (MPC)will ( change, not change). (d) (APC,…Assessing the impact of digital facilitation in Ghana’s investment sector. Required i. identify the dependent and the indpendent variable in the above research topic.
- Households across a nation face a reduction in wealth. As a result, savings will increase dispos able decrease not change and disposable income will increasedisposabledecreasenot change. This will lead to a/an increasedisposabledecreasenot change in supply of loanable funds. Therefore the equilibruim level of investment will16 100% 3 7 4 Consider the economic model: Yt Ct + it Ct myt-1 act-1 where y is GDP, c is consumption, i is investment, m and a are multipliers. (i) Write down a difference equation for y (ii) Find the condition under which the steady state exists, and find the steady state solution (iii) Find the condition under which the system converges to the steady state (iv) Find the condition under which y will show sinusoidal (cyclical) pattern (This occurs when the roots of the characteristic equation are complex "6²-4ac < 0") ERMT Problem Paper 01 28°C Light rain || || 3 hpYou work for the International Monetary Fund in Washington DC, mon- itoring Singapore's real consumption expenditures. Using a sample of quarterly real consumption data (measured in billions of 2005 Singapore dollars), Yt, t = 1990.1, 2006.4, you estimate the linear consumption .... trend model, Yt = Bo + B1TIME + Et, where & ~ iidN(0, o²), obtain- ing the estimates Bo = 0.51, B1 2.30, and ô? 16. Based upon your estimated trend model, construct feasible point, interval and density forecasts for 2010.1. a Find the exact value of the point forecast 2010.01. b Provide the distribution of the density forecast at 2010.01. c Provide interval forecasts for 68% and 90% confidence levels.
- The table below is the multiplier matrix of the 4 sector economic model. Exogenous Variables G* T* AND C T Even. YD M B AS S A 1.163 0.817 0.311 1.73 0.311 0.311 - 0.311 0.222 I* 1.163 0.817 0.311 1.73 0.311 0.311 - 0.311 0.222 1.163 0.875 0.311 1.73 0.311 -0.655 -0.311 0.222 - 1.094 -0.815 0.781 -1.875 -0.219 0.781 0.219 - 0.563 X* 1.163 0.815 0.311 1.25 0.311 0.311 0.547 0.222 a. Calculate the change of each endogenous variable value of the effect of AG* = 160 M* - 1.163 - 1.393 - 0.311 - 1.25 0.655 - 0.311 - 0.547 - 0.222 b. Calculate the net change in each value of the endogenous variable as a result of the simultaneous change, AX* = 200 and AM* = -150 c. AT* = 250; By how much does the government need to change G* so that the net effect of these 2 shocks (AT* = -250 and AG* which you calculated) so that AB = 0? d. Calculate the net change in each value of the endogenous variable as a result of the 2 shocks occurring in (c).Using this functional form in the intertemporal trade-off condition that you previ- ously derived, do some algebra to obtain an equation that specifies how much the individual would save as a function of q, β, y1 and y2.6) If the marginal propensity to save is 0.4 and disposable income decreases from $2,000 to $1,000, saving will A) increase by $80. B) decrease by $80. C) decrease by $400. D) increase by $400. Note:- Please refrain from offering handwritten solutions. Please ensure that your response maintains accuracy and quality to avoid receiving a downvote. Take care of plagiarism. Answer completely. You will get up vote for sure.