Consider an economy in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate changes. You are given the following information concerning autonomous consumption, the marginal propensity to consume, planned investment, government purchases of goods and services, and net exports: Ca = 1,500 – 20r, c = 0.6; I=2,450 – 60r; G= 1,980; NX=- 200; T= 1,750. a. Compute the value of the marginal propensity to save. b. Compute the amounts of autonomous planned spending, Ap, when the interest rate equals 0, 2, 4, and 6. c. Compute the equilibrium levels of income when the interest rate equals 0, 2, 4, and 6. Graph the IS curve. d. Suppose that policymakers decide to reduce the number of troops in Afghanistan, which results in a reduction of government spending of $80 billion. Compute the new amounts of autonomous spending, Ap, when the interest rate equals 0, 2, 4, and 6. e. Compute the equilibrium levels of income when the interest rate equals 0, 2, 4, and 6 and graph the new IS curve.

Consider an economy in which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate changes. You are given the following information concerning autonomous consumption, the marginal propensity to consume, planned investment, government purchases of goods and services, and net exports: Ca = 1,500 – 20r, c = 0.6; I=2,450 – 60r; G= 1,980; NX=- 200; T= 1,750. a. Compute the value of the marginal propensity to save. b. Compute the amounts of autonomous planned spending, Ap, when the interest rate equals 0, 2, 4, and 6. c. Compute the equilibrium levels of income when the interest rate equals 0, 2, 4, and 6. Graph the IS curve. d. Suppose that policymakers decide to reduce the number of troops in Afghanistan, which results in a reduction of government spending of $80 billion. Compute the new amounts of autonomous spending, Ap, when the interest rate equals 0, 2, 4, and 6. e. Compute the equilibrium levels of income when the interest rate equals 0, 2, 4, and 6 and graph the new IS curve.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Financial Statements

Financial statements (or financial reports) are the formal records of the financial activities that are undertaken by a firm. They are convenient instruments used for analyzing a company’s financial position and performance. Financial ratios are created with the help of the numerical values that are derived from the financial statements. They give meaningful information about the financial performance of the company.

Question

Just need question D, and E

Consider an economy in which taxes, planned investment, government spending on goods and
services, and net exports are autonomous, but consumption and planned investment change as
the interest rate changes. You are given the following information concerning autonomous
consumption, the marginal propensity to consume, planned investment, government purchases of
goods and services, and net exports:
Ca = 1,500 – 20r, c = 0.6; I= 2,450 – 60r; G= 1,980; NX =- 200; T = 1,750.
a. Compute the value of the marginal propensity to save.
b. Compute the amounts of autonomous planned spending, Ap, when the interest rate equals 0,
2, 4, and 6.
c. Compute the equilibrium levels of income when the interest rate equals 0, 2, 4, and 6. Graph
the IS curve.
d. Suppose that policymakers decide to reduce the number of troops in Afghanistan, which
results in a reduction of government spending of $80 billion. Compute the new amounts of
autonomous spending, Ap, when the interest rate equals 0, 2, 4, and 6.
e. Compute the equilibrium levels of income when the interest rate equals 0, 2, 4, and 6 and
graph the new IS curve.

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