Q: an economy where the various components of expenditure follow these equations: C = 10 + 0.8Yd I =…
A: A) Y= C+I+G+(X-M) Y= 10+0.8Yd+500+100+(300-0.1Y) Y= 10+0.8(Y - T)+500+100+(300-0.1Y) Y= 10+0.8(Y -…
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A: Government purchases of goods and services increased by = $75000 MPC = 0.75
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Explain in detail what effect a reduction in government spending will have on: (1) the LM curve; and (2) the IS curve.
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- Analyze the impact of the expenditure multiplier from Keynesian Perspectiveq14.2Q.1.13 An increase in the marginal propensity to consume: (1) Shift the aggregate spending function (A) upwards; (2) Shifts the aggregate spending function (A) downwards; (3) Increases the slope of the aggregate spending function (A); (4) Decreases the slope of the aggregate spending function.
- An economy is described by the following equations: = 2,000 + 0.5 (Y - T) = 900 IP G = 1,800 NX = 100 T 1,800 8,200 Y* = a. Find a numerical equation linking planned aggregate expenditure to output. Instructions: Round the value for mpc to one decimal place. PAE= Y b. Find autonomous expenditure and induced expenditure in this economy. Instructions: Round the value for mpc to one decimal place. Autonomous expenditure: Induced expenditure: YI need help with question 4, especially with the graph. Please give a step-by-step on how to create the graph and the coordinates. I also need help with question 5. Suppose that the equation for autonomous planned spending, Ap , is Ap = 6,200 – 200r and the value of the multiplier, k, is 2.5. Derive the equation for the IS curve, Y = kAp . Graph the IS curve for interest rates between 0 and 8, with intervals of one-half of a percentage point. Suppose the equation for the LM curve is Y = 13,500 + 100r. Use this equation to explain the level of income at which there is a zero lower bound on the federal funds rate, the interest rate that the Fed controls. Graph the LM curve for interest rates between 0 and 8, with intervals of one-half of a percentage point. Suppose that the term premium is 1.0 percentage point and the risk premium is 2.0 percentage points. With Figure 5-11 as a guide, use the LM curve with the zero lower bound and the term premium and risk premium to graph the…You are provided with the following information about an imaginary economy called Keynesia: Government expenditure 400 Exports 250 Autonomous imports 50 Autonomous consumption 150 Investment expenditure 300 Full- employment output 1900 Marginal propensity to consume 0.75 Marginal propensity to import 0.15 Tax rate 0.25 Required (I) Derive the IS equation (ii) Derive the savings function (iii) Calculate the equilibrium level of income using the aggregate expenditure approach. (iv) What would the value of income be if the trade balance is zero? (v) What would the value of income be if autonomous consumption increases by 50
- Consider an economy where the various components of expenditure follow these equations: C = 10 + 0.8Yd I = 500 G = 100 X = 300 М — 0.1Y T = 0.1Y c. Calculate the equilibrium level of GDP in this economy, highlighting what are the values of the Keynesian multiplier and the autonomous components of expenditure.Suppose MPC equals 0.9, government taxes 30% of all incomes, and the marginal propensity to import equals 0.07. The economy's real GDP is currently $5,454 billion while its potential real GDP is $6,000 billion. GIven a horizontal SRAS curve, what change in government spending on goods and services would bring the economy to full employment real GDP? When doing the calculations, round the value for the multiplier to 2 decimal places, and round your final value for the change in G to the nearest billion.Suppose the Federal government raises taxes which would decrease consumption by $50 billion, that the spending multiplier was 5, the money supply was $500 billion, and the inflation rate was 5%. Using the formula with "Multiplier = change in equlibrium GDP/initial change in spending formula" to calculate the equilibrium U.S. GDP with the above information (Note: Please show the full calculation of the equilibrium U.S. GDP with formula and step by step)
- What is the eventual effect on real GDP if the government increases its purchases of goods and services by $75,000? Assume the marginal propensity to consume (MPC) is 0.75. $ What is the eventual effect on real GDP if the government, instead of changing its spending, increases transfers by $75,000? Assume the MPC has not changed. $ An increase in government transfers or taxes, as opposed to an increase in government purchases of goods and services, will result in an identical eventual effect on real GDP. no change to real GDP. a larger eventual effect on real GDP. a smaller eventual effect on real GDP.Investment = 450 Consumption = 700 + 0.7Yd Government expenditure= 500 Taxes = 350 Export = 400 Import = 300 (All values are in RM million) Based on the information, answer the following question Find the value of marginal propensity to consume (MPC) & marginal propensity to save (MPS). Derive the saving function Calculate the equilibrium income level using the aggregate expenditure – aggregate supply approach Sketch the equilibrium income using the aggregate expenditure-aggregate supply approach without scale.An economy's AD curve is P=19-0.2Y and its AS curve is P-1.5+0.05Y. Suppose that autonomous expenditure increases by two such that the AD curve is changed to P=21-0.2Y. What is the value of the multiplier that allows for price increases? The answer is 4. please provide explanation in detail.
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