- Consider an economy described by the following equations: Y = C +1 + G AND, Y = 20,000; G = 4,000; T = 4,000; C = 1000 + 0.80(Y – T); : I= 2,500 – 120r. national saving AND the equilibrium real interest rate equal: Select one: O a. national saving 3200 AND the equilibrium real interest rate 2.5%. O b. national saving 2200 AND the equilibrium real interest rate 2.5%. O .national saving 2500,AND the equilibrium real interest rate 2%. O d. national saving 4000 AND the equilibrium real interest rate 1.5%.

- Consider an economy described by the following equations: Y = C +1 + G AND, Y = 20,000; G = 4,000; T = 4,000; C = 1000 + 0.80(Y – T); : I= 2,500 – 120r. national saving AND the equilibrium real interest rate equal: Select one: O a. national saving 3200 AND the equilibrium real interest rate 2.5%. O b. national saving 2200 AND the equilibrium real interest rate 2.5%. O .national saving 2500,AND the equilibrium real interest rate 2%. O d. national saving 4000 AND the equilibrium real interest rate 1.5%.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Based on the following statistics, how much is consumption? Total spending Investment Government spending Exports Imports O-$0.38 trillion O $5.13 trillion O $6.49 trillion O $11.62 trillion $11.62 trillion $2.56 trillion $2.95 trillion $1.80 trillion $2.18 trillion
2. The following table contains data for a hypothetical closed economy that uses the dollar as its currency.
A country faces diminishing marginal returns when increasing it's capital stock. If this country added 1,000 units of capital last year and saw their GDP rise by $500 per person, what would you expect to happen if they had added 2,000 units of capital instead? O GDP would increase by another $500 per person O GDP would increase by less than another $500 per person O GDP would increase by more than another $500 per person O It is impossible to tell what would happen What is a potential downside of using patents to promote the creation of new technology? Without a market test, patents might be given to technology which ends up being useless. O Government money may be directed towards unproductive goals. It slows the spread and development of those ideas by restricting competition. They prohibit competition forever. What is the law of diminishing marginal returns?
ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C= 100 + 0.9 Y. Assume further that planned investment /g, government spending G, and net exports Xn are independent of the level of real GDP and constant at lg= 60, G= 0, and Xn= 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y= C+ lg+ G+ Xn. Instructions: Round your answers to the nearest whole number. a. Calculate the equilibrium level of income or real GDP for this economy. $ b. What happens to equilibrium Yif lg changes to 40? 2$ What does this outcome reveal about the size of the multiplier? Multiplier =
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(a) Consider a closed economy whose desired savings (Sd) and desired investment (Id) are given by the following expressions: CC₂ rd where r denotes the real interest rate. Find the equilibrium in the Goods market for this economy, and represent it in a graph. From now on, suppose there are two large Countries in the world, say Canada (Ca) and the United States (US). Ca (b) To start with, assume that both Countries are closed economies. Their desired consumption (Cd) and desired investment (I) are given by: Cus Its Sd Id = = = = 100+ 600r 170 - 400r 10+ cca (Yca Tca) - 100r 15 - 100r 40+ cus (Yus - Tus) - 200r = 230 - 200r Moreover, output (Y), taxes (T), public expenditure (G), and the marginal propensity to consume (c) are as follows:
Assume there are no investment projects in the economy that yield an expected rate of return of 25 percent or more. But suppose there are $10 billion of investment projects yielding expected returns of between 20 and 25 percent; another $10 billion yielding between 15 and 20 percent; another $10 billion yielding between 10 and 15 percent; and so forth. a. Cumulate these data and present them graphically using the graph below, putting the expected rate of return (and the real interes rate) on the vertical axis and the amount of investment on the horizontal axis. Instructions: Use the tool provided 'ID' to plot the investment demand curve (plot 6 points total). 30 Tools ID 20 15 10 10 20 30 40 50 60 Investment (billions of dollars) Instructions: Enter your answers as a whole number. b. What will be the equilibrium level of aggregate investment if the real interest rate is: 15 percent: $ billion 10 percent: $ billion 5 percent: $ billion Expected rate of return, percent 25
1. An increase in expected future output while holding today's output constant would A. increase today's desired consumption and decrease desired national saving. B. decrease today's desired consumption and decrease desired national saving. C. increase today's desired consumption and increase desired national saving. D. decrease today's desired consumption and increase desired national saving.
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Write out the equation for desired national savings. What changesto desired national saving and desired national consumption happen whengovernment spending increases, funded by an increase in taxes? Why doesconsumption change by less than G?
For a closed economy, GDP is $10, consumption is $8, taxes are $1, and the buget deficit is $1, What are private saving and national saving? a. $2 and $1 O b. $1 and $2 O c. $1 and $0 O d. $1 and $1
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