Consider the simple macro model with a constant price level and demand-determined output. The specific parameter values and collected data aregiven below for the following questions: (Assume a linear consumption function.)MPSave = 0.16m = 0.18G= 95I- 290NX = 35 when YYd = 0.88YY* (potential GDP) = 1300S = - 60 at Yp = 50Note: If your answer comes with decimal places, round up your answer for two decimal places. ex) 0.5636 --> 0.56 or 0.1256 --> 0.13Part a) With the given information above, compute the values of X, autonomous consumption expenditure (=a), and MPSpend.a =MPSpend (in two decimal places)Part b) Using the given information and values found above, compute the total autonomous expenditures and equilibrium GDP.Total autonomous expenditure =ye (in two decimal places) =Part c) Suppose the government attempts to stabilize actual GDP at the given value of Y*, with the given G. Compute the new net tax rate for the fiscalstabilization policy.New t (in two decimal places) =%Part d) Suppose the new net tax rate of 0.23 has successfully stabilized actual GDP at the given value of Y*. Compute the desired savings, APC, Budgetbalance and simple multiplier.Desired savings =APC (in two decimal places) =Budget balance =Simple multiplier (in two decimal places) =

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Consider the simple macro model with a constant price level and demand-determined output. The specific parameter values and collected data are given below for the following questions: (Assume a linear consumption function.) MPSave = 0.16 m = 0.18 G- 95 |- 290 NX - 35 when Y Yd = 0.88Y Y (potential GDP) = 1300 S= - 60 at Yp = 50

Consider the simple macro model with a constant price level and demand-determined output. The specific parameter values and collected data are given below for the following questions: (Assume a linear consumption function.) MPSave = 0.16 m = 0.18 G- 95 |- 290 NX - 35 when Y Yd = 0.88Y Y (potential GDP) = 1300 S= - 60 at Yp = 50

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter9: Aggregate Expenditures

Section: Chapter Questions

Problem 12E

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