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

See similar textbooks

Similar questions

What effects would each of the following have on aggregate demand or aggregate supply? Justify your answer. In each case use a diagram to show the expected effects on the equilibrium price level and real output level in the economy. Assume that all other things remain constant and prices are inflexible downward. (a) A reduction in interest rates at each price level (b) A sizable increase in labor productivity. (c) The nation’s currency appreciates against its major trading partners .
The economy of Ashville is currently in a macroeconomic equilibrium, as depicted by point E, in the accompanying figure. The main component of Ashville's exports consist of the raw materials that it derives from its natural resources. Suppose that the world demand for raw materials decreases sharply, resulting in a decrease in the price of raw materials throughout the world. The decrease in the world demand for raw materials, which is the major source of Ashville's exports, will the level of aggregate demand in Ashville, causing a ▼shift in the AD curve. The decrease in the world demand for raw materials, which implies a decrease in the level of factor prices, leads to in the unit cost of production in Ashville, causing a 7 shift in the AS curve. Use the three-point curve drawing tool twice to draw and label new AS and AD curves that shows the effect of this shock on Ashville's economy. Carefully follow the instructions above, and only draw the required object. The overall effect of…
Refer to the data in the table given below. Suppose that the present equilibrium price level and level of real GDP are 100 and $280, and that data set A represents the relevant aggregate supply schedule for the economy. (A) Price Level 100 100 100 100 Real GDP 205 230 255 280 (B) Price Level 110 100 95 90 Real GDP 230 230 230 230 (C) Price Level 110 100 95 90 Real GDP 280 255 230 205 a. What must be the current amount of real output demanded at the 100 price level? Real output demanded = $ b. If the amount of output demanded declines by $25 at the 100 price level shown in A, what will be the new equilibrium real GDP? The new equilibrium level of real GDP = $ In business cycle terminology, what would economists call this change in real GDP? (Click to select)
The graph below is associated with a hypothetical country. Consider a decrease in aggregate demand (AD). Specifically, aggregate demand shifts to the left from AD₁ to AD2, causing the quantity of output demanded to fall at each price level. For instance, at a price level of 140, output is now $200 billion, where initially it was $300 billion. PRICE LEVEL 170 160 150 140 130 120 110 100 90 0 100 +-+ I I 200 300 400 500 OUTPUT (Billions of dollars) AD1 AD2 600 700 800 ?
Describe the change in aggregate supply that should result from each of the following changes in determinants. Assume that nothing else is changing besides the identified change. (In your answer, indicate whether the change will "Decrease" or "Increase" aggregate supply or have no effect.) (a) A rise in the average price of inputs; (b) An increase in worker productivity; (c) Government antipollution regulations become stricter; (d) A new subsidy program is enacted for new business investment in productive equipment; (e) Energy prices decline.
Just solve questions 41-44, thank u! 30.A surplus of product will occur when price is: above equilibrium with the result that quantity demanded exceeds quantity supplied above equilibrium with the result that quantity supplied exceeds quantity demanded below equilibrium with the result that quantity demanded exceeds quantity supplied below equilibrium with the result that quantity supplied exceeds quantity demanded 31.Which of the following would decrease aggregate demand and shift the AD curve to the left? a decline in personal income tax rates a decline in consumer spending a higher level of government purchases a fall in interest rates 32.Which of the following is an implicit cost to the Johnston Manufacturing Company? payments of wages to its office workers property taxes rent paid for the use of equipment owned by the Schultz Machinery Company returns that the shareholders could have received if they had not bought shares in the Johnson Manufacturing Company…
When the economy is creating less output than its potential, it means: Multiple Choice о O о O contractionary policy needs to be enacted. the government will reduce its spending. the economy is expanding. some resources are unemployed.
A ship gets stuck in the Suez Canal that shuts down shipping lanes. If we start in equilibrium, what happens? Aggregate demand to shift left. Short-run aggregate supply to shift right. Short-run aggregate supply to shift left. Aggregate demand to shift right.
Equilibrium output only occurs when 1) government budget is balanced 2) there are no output gaps 3) there is no tendency for output to change 4) the level of imports is equal to the level of exports
The U.S. macroeconomy is in a short-run equilibrium at Q1 and P1. What is going to happen in the long-run? P Р1 QN Q₁ SRAS1 AD Q This is a diagram with price on the vertical axis and quantity on the horizontal axis. There is a place marked on the horizontal axis with a QN. There is an upward sloping line labelled SRAS and a downward sloping line labelled AD. The place these two lines intersect is labelled Q1 on the horizontal axis and P1 on the vertical axis. Q1 is to the right of QN. O The aggregate demand curve will shift left leading to falling prices and falling output. O SRAS curve will shift left leading to rising output and rising prices. OSRAS curve will shift left leading to rising prices and falling output.
In 2006, the economy of Singsville had an aggregate demand and aggregate supply according to the following schedule:Price level Aggregate Demand Short-Run Aggregate Supply100 $1445 $1085110 $1380 $1140120 $1315 $1195130 $1250 $1250140 $1185 $1305150 $1120 $1360160 $1055 $1415 What was the equilibrium price level in Singsville in 2006?
Which of the following would not shift the aggregate demand curve to the left? Group of answer choices An decrease in government spending. An increase in income taxes. A stock market boom. A decrease in the money supply.