Part 1: Given the data below, calculate equilibrium values of real GDP, consumption, investment, exports, and imports. Part 2: Prove that your calculations are correct by writing an explanation. Part 3: Assume this economy is operating below its potential. Describe and explain all demand management policies to help this economy recover. Part 4: Assume this economy is operating $1,000 below its potential. Calculate the individual change in G, T, and I bar necessary to close this output gap. Data Required: A bar = $100, MPC = .95, T bar = $50, i bar = .05, alpha zero bar = $25, 1 bar = $200, alpha one bar = $15, G bar = $100, X bar = $10, alpha two bar = $5, M bar = $15, and alpha three bar = $3 A = Productivity shift variable MPC = Marginal propensity to consume T = Aggregate taxes paid to government i = Investment per capita G = Government spending I = Investment X = Generic variable M = Money supply Alpha = Capital's share in Cobb-Douglas production function

Part 1: Given the data below, calculate equilibrium values of real GDP, consumption, investment, exports, and imports. Part 2: Prove that your calculations are correct by writing an explanation. Part 3: Assume this economy is operating below its potential. Describe and explain all demand management policies to help this economy recover. Part 4: Assume this economy is operating $1,000 below its potential. Calculate the individual change in G, T, and I bar necessary to close this output gap. Data Required: A bar = $100, MPC = .95, T bar = $50, i bar = .05, alpha zero bar = $25, 1 bar = $200, alpha one bar = $15, G bar = $100, X bar = $10, alpha two bar = $5, M bar = $15, and alpha three bar = $3 A = Productivity shift variable MPC = Marginal propensity to consume T = Aggregate taxes paid to government i = Investment per capita G = Government spending I = Investment X = Generic variable M = Money supply Alpha = Capital's share in Cobb-Douglas production function

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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