Exercise 1 (45%):In the textbook, Model I is the least complicated way to definethe relations in the real economy. Then the activity Y is afunction of exogenous factors explained outside the model.The model is based on the data found in the NationalAccounts and is defined as follows:Y= Cp + Ip +G+ NXCp = c(Y-T) +C°Ip = 1° - biNX = NX° - aYT= T° + tY.Based on such a model I, we establish a general function forthe real economy which can then be as follows:Y=-GL-D7C° + 1° + NX° + G - cT° – bi)1- c(1-t) +aThe elements that are part of the general macroeconomicrelationship have the following values:Cp = 0.75 (Y - T) + 1400Ip = 1250 - 90iNX = 2800 - 0.3YT= 1200 + 0.19YG = 2000i = 1.5.a) Find Y, Cp and the budget balance T - GInternational growth prospects have decreased and are around1.0%.Today, the price of crude oil is below $ 65 / barrel, so that theestimate for income to the "Oil Fund" has been reduced. Inorder to boost the domestic economy and bring about moregrowth, the government has set up a committee to launch apackage of measures in 2020. In the Finance Committee,"KrF" and "V" choose to enter into discussions with theopposition to promote growth-stimulating measures for toraise real investment domestically already in the state budgetfor 2020. The two parties secure a majority to request that thegovernment submit such a package of measures to stimulateinvestment in small and medium-sized enterprises. Y: GDPC: private consumptionG: public demand (expenditure)In: private gross real investmentin: interest rate levelNX: net exports (trade balance)T: tax levelt: tax rateTO: income-independent taxc: marginal consumption rateb: investor's marginal interest rate sensitivity (shows reduction ininvestments if interest rates increase by one unit)a: marginal importrate

Open economy model where all sectors of economy is included AD= C+I+G+NX( export-import )

Exercise 1 (45%): In the textbook, Model I is the least complicated way to define the relations in the real economy. Then the activity Y is a function of exogenous factors explained outside the model. The model is based on the data found in the National Accounts and is defined as follows: Y= Cp + Ip +G+NX Cp = c(Y-T)+C° Ip = 1° - bi NX = NX° - aY T=T° +tY. Based on such a model I, we establish a general function for the real economy which can then be as follows: To© + 1° + NX° + G- cr° - bi) The elements that are part of the general macroeconomic relationship have the following values: Cp = 0.75 (Y - T) + 1400 Ip = 1250 - 90i NX = 2800 - 0.3Y T = 1200 + 0.19Y G= 2000 i= 1.5. a) Find Y, Cp and the budget balance T- G

Exercise 1 (45%): In the textbook, Model I is the least complicated way to define the relations in the real economy. Then the activity Y is a function of exogenous factors explained outside the model. The model is based on the data found in the National Accounts and is defined as follows: Y= Cp + Ip +G+NX Cp = c(Y-T)+C° Ip = 1° - bi NX = NX° - aY T=T° +tY. Based on such a model I, we establish a general function for the real economy which can then be as follows: To© + 1° + NX° + G- cr° - bi) The elements that are part of the general macroeconomic relationship have the following values: Cp = 0.75 (Y - T) + 1400 Ip = 1250 - 90i NX = 2800 - 0.3Y T = 1200 + 0.19Y G= 2000 i= 1.5. a) Find Y, Cp and the budget balance T- G

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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