Answered: Determine the equilibrium income Y and…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Determine the equilibrium income y and interest rate r,given the following information about the commodity market C=0.6Y+60 I=-40r+1300 Where C and I dwnote consumption and planned invesment ,respectively,and the following information about the money market Ms=600L1=0,2y L2=-30r+40

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7. Determine the equilibrium income Y and interest rate r, given the following information about the
commodity market:
C = 0.6Y + 60
| = -40r + 1300
where C and I denote consumption and planned investment, respectively, and the following
information about the money market:
MS = 600 L13 0.2Y
L2 = -30r + 40
where MS, L1 and L2 denote money supply, transaction-precautionary demand for money and
speculative demand for money, respectively.
The marginal propensity to consume decreases. By producing a rough sketch of the IS and LM curves
on the same diagram, explain whether the equilibrium values of Y andr will increase, decrease or
stay the same.
The total cost, TC, of producing 100 units of a good is 600 and the total cost of producing 150 units is
850. Assuming that the total cost function is linear, find an expression for TC in terms of Q, the
number of units produced.

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

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