Exercise 5.2 Given the intertemporal production possibilities frontier to the right. Point A represents a production combination of present and future goods. Using the point drawing tool, show a production combination consistent with a decrease in the real interest rate. Label this point 'B'. Carefully follow the instructions above and only draw the required object. Selected: Point tool * Delete Clear Future Consumption ? FCO (0,9.93) PCO Present Consumption Q G Question Help ▼

Exercise 5.2 Given the intertemporal production possibilities frontier to the right. Point A represents a production combination of present and future goods. Using the point drawing tool, show a production combination consistent with a decrease in the real interest rate. Label this point 'B'. Carefully follow the instructions above and only draw the required object. Selected: Point tool * Delete Clear Future Consumption ? FCO (0,9.93) PCO Present Consumption Q G Question Help ▼

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter2: Mathematics For Microeconomics

Section: Chapter Questions

Problem 2.4P

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You are an economic advisor to the government. Discuss your opinion . a) How COVID-19 pandemic will affect the consumption behavior as well as the investment done by the firms and household for the next two years? b) What are the actions or policies that the government can implement to face this situation? please answers with analysis and --graph (if possible)
(1)The following macroeconomic model describes the economy of Sunderland. 1. Y= C +I + G + NX 2. C = 220 + 0.63 Y 3. 1 = 1000- 2000R 4. G = Go 5. NX = 525-0.10Y-50OR 6. M (0.1583Y-1000R)P (a)ls it a fair characterization to refer to equation #2 as a "simple" consumption function? Explain. (b)Derive the expression for equilibrium real output, Y, for this economy. Note: In your final expression for Y, restrict coefficient values to three decimal points. (c) Suppose government spending is 1200 , money supply by the Central Bank is 900 and the price level is 1, find the value of GDP (Y) and equilibrium interest rate (R) for Sunderland. Income Identity Consumption function Investment function Government Expenditure Net export function Money market equilibrium (2)The questions in this section are related to the macroeconomic model of Sunderland. (a)The expression you are asked to derive in question #1b can be considered an aggregate demand curve. Do you agree? Explain your answer. (b)Sketch…
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4) Distinguish between the short-run and long-run factors that affect residential investment.
5) Mrs. Gizem has a salary of 10000 TL per month. Assuming that her autonomous (zero-income level) consumption is 600 TL and her MPC is 0.72, find how much she spends in one month and how much she saves? b) If Mrs. Gizem receives a salary rise of 2000 which increases her monthly salary to 12 000 per month; how much increase we may expect in her consumption and her saving?
Suppose Alice faces the following prices and income across two periods. Prices Income Period 10 200 1 Period 12 2 250 Suppose the interest rate is 5%. Using the equation editor, write down the intertemporal budget constraint for Alice.
1. Complete the accompanying table with disposable income (DI) and consumption (C) schedules for a private, closed economy. All figures are in billions of dollars. DI Consumption Saving АРС APS MPC MPS 8. 40 40 80 72 120 104 160 136 200 168 240 200 (a) Refer to the above data. If plotted on a graph, the slope of the consumption schedule would be: (b) The break-even level of income is ($ ) where saving equals ( $ :). Households dissave ( $ ). Dissaving occurs at the lowest levels of income as households spend ( more, less ) than they receive in disposable income. This dissaving could occur with households liquidating (selling for cash) their assets or borrowing money. As income rises we see that savings ( increases, decreases ) by a greater and greater amount. (c) If consumption increases by $10 billion at each level of disposable income, the average propensity to consume (APC) will ( change, unchange) and/but the marginal propensity to consume (MPC)will ( change, not change). (d) (APC,…
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What are the steps involved in plugging in the highlighted equation (the real interest rate) into the budget constraint?
Suppose that a person can borrow and lend at an interest rate of 10 percent. But there is a 5% rate of inflation and one has to pay an income tax of 30 % on all interest income. If you borrow money, you can deduct interest as an expense. Where current consumption is on the horizontal axis and future consumption is on the vertical axis: (a) the budget line will have a kink at the point of no saving or lending. (b) the budget line will be a straight line with a slope of about 1: 02. (c) the budget line will be a straight line with a slope of about 1:05. (d) the budget line will be a straight line with a slope of about 1:35.