Consider the following model:C- 130 + 0.7 (Y- T)1= 70 + 0.2 Y- 880 iG- 100, T-100(M/P)-0.1Y - 1,000 i(M/P) 60.81. What istheequationChoose.for the IScurve?2. What istheequationChoosefor the LMcurve?3. What istheequilibirumChooseoutput (Y)and interestrate (1)?4. Supposethatgovernmentspendingdecrease toG=50. Whatis the valueof fiscalChoosepolicymultiplier?What is thenewequilibirumvalue of Yand 1?5. Supposethat moneysupplyincrease to5. Supposethat moneysupplyincrease toM= 110.8.What is thevalue ofmonetarypolicymultiplier?What is theChoose.newequilibirumvalue of Yand i?6. Set Gand Msequal to itsinitial valueof (G=100,and Ms =60.8). Nowsupposethat taxesdecrease to Choose.50. What isthe value oftaxmultiplier?What is thenewequilibirumvalue of Yand i? Choose...Y = 820 + 10,000 im = - 2.42 Y = 1,588 i = 9.85%%3DY = 608 + 10,000 iY = 2,300 - 8,800 im = 5.32 Y = 1,242 i= 6.34%Y = 1,596 i = 8%m= 5.32 Y= 1,242 i= 6.34%%3DY = 1,596 i= 8%%3D%3DY = 4,000 - 9,000 im = 4.22 Y = 1,367 i = 7.55%%3D%3Dm = 4.68 Y = 1,742 i = 6.34%%3DY = 1,508 i = 9%m =- 3.72 Y = 1,694 i= 10.86%%3D

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Answered: Consider the following model C- 130 •…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Compute the two-year nominal interest rate (12) using the exact formula and the approximation formula for each set of assumptions listed in the following tables. The assumptions are in each table's first three columns: they give values for the current one-year interest rate (it), next year's expected one-year interest rate (i+1), and the term premium on a two-year bond (x). Enter your response for the approximate rate as calculated; for the exact rate, round your response to three decimal places. Term Premium 0% 1₁t 2% 1₁t+1 3% Exact int % Approx. 12t %
Question 2: Consider a model exactly like that in Question 1 - where the person receives income $48,326 - in period 1 and additional income $44,928 in period 2 except let's now suppose that the person faces a liquidity constraint. Specifically, she can still save at an interest rate of 4%, but if she borrows, then she must pay an interest rate of 8%. (a) If the person wants to save, the relevant interest rate is 4%. For what values of 8 is it optimal to save? [Hint: You already know the answer from Question 1.] (b) If the person wants to borrow, the relevant interest rate is 8%. (i) Suppose the interest rate is 8%, and solve for the optimal c₁ and c₂ as a function of 8. (ii) If the interest rate is 8%, for what values of 8 is it optimal to borrow? [Note: Please report your answer to 5 decimal points.] (c) Given the liquidity constraint, for what values of 8 is it optimal to neither borrow nor save? [Hint: Two conditions must hold: (i) 8 must be such that the person does NOT want to…
Consumption and the real interest rate: According to the life-cycle / permanent-income hypothesis, consumption depends on the present discounted value of income. An increase in the real interest rate will make future income worth less, thereby reducing the present discounted value and reducing consumption. To incorporate this channel into the model, suppose the consumption equation is given by Assume the remainder of the model is unchanged from the original setup, as in Table 11.1. (a) Derive the IS curve for this new specification. (b) How and why does it differ from the original IS curve?
Consider the following model of the factors that influence a person's annual wage: Y = β0 + β1X1 + β2X2 + β3X1X2 + β4X3 + u where Y = annual wage, in dollars X1= years of formal education X2 = age, in years X3 = variable equal to 1 if male, 0 otherwise U = error term Which of the following is the interpretation of β1 alone? The effect of X1 on Y when X2 = 0 The effect of X1 on Y when X2 is at its median value. The effect of X1 on Y, holding all else equal. The effect of X1 on Y when X2 is at its mean value.
a) consider the following IS–LM model: C = c1(Y - T) I = b1Y - b2i M/P = d1Y - d2i Solve for equilibrium output. Assume c1 + b1 < 1. b) Solve for the equilibrium interest rate. (Hint: Use the LM relation.) c) Solve for investment.
I need clarification on what a "numerical solution" should be in the context of my economic question. Is it simply a number or numerical value, or is it a formula? I'm not looking for the answer to this problem. I am just making sure i understand the question. See attached.
5. Using the accelerator model in which the level of inventories in current period depends on the expected sales following this equation: Nt= a ESt Where N stands for the current level of inventories, ESt stands for the level of expected sales and alpha is a parameter equal to 0.6. The growth or increase in inventories is given by AN, = B(N₁-N₁-1), where Beta parameter is equal to 0.3 a) Suppose that the initial level of inventories is zero and the forecasting for sales for this period is equal to 200. Can you quantify the level of inventory investment? What would it be total production in period 1? b) Now suppose that in the second period there growth of inventories is 12%. What is the value of inventory investment for period 2 and forecasting sales for period 2?
4. Complete the steps in the derivation of the Fisher equation discussed on slide 17 of lecture 3 by showing that if we 1+i (a) Begin with = 1+r. 1+ 7 (b) Replace 1 with the Taylor-series expansion 1+ 7° 1 = 1- 7° + (7°)² - (7*)³ + (m*)ª – .. in the expression in part 4(a) above. (c) Assume that we can ignore any terms involving in“ or (7*)" for n > 2 because 7 is small. that we are left with the Fisher equation r = i – ".
If you draw the cash flows from any investment, you would have negative cash flows at the beginning, and then you would receive a stream of positive cash flows thereafter. So why do we need the separate concept of a J-curve? In other words, what is the difference between a J-curve and the cash profile of any other investment?
Give me accurate answer otherwise i give multiple downvote and complain to bartelby Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate
Explain why in every econometric model there must be an error term, explain its function.
Please see attached: Answer does not require any explanation. Feel free to just state answer.

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