Q#1: [40 pts] (a) Draw an AS/AD graph. Assume that in your graph GDP* =1,000 (million) and inf* = 8%. Put these values on your graph. If this graphrepresents the US economy, explain what major problem you see with thisequilibrium.(b) Assume that mpc = 0.90 and the US government is considering twooptions for economic policy [see below]. Draw a graph for each option.Show the change in equilibrium and label the now

AS and AD curves intersect at the red dot, which is equilibrium. If this graph represents the US…

Answered: Q#1: [40 pts] (a) Draw an AS/AD graph.…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The question is based on open economy Macroeconomics (photo attached).
Assuming that there is no government spending or trade, an economy’s GDP is the sum of domestic consumption C and investment I, i.e. Y = C+ I Assume that I is unaffected by GDP Assume the consumption function is C = c0 + c1Y In any equilibrium aggregate demand, AD must be equal to Y, GDP. Given this model, which FIVE of the following statements are correct? Select one or more: A. If the economy above is a demand-driven economy, then the equilibrium solution for Y is given by Y = m(c0 + I), where m = 1/(1 - c1) is the multiplier. B. if c1 = 0.8 the multiplier is equal to 1/0.8= 1.25 C. if c1 = 0.75 the multiplier is equal to 4 D. assume c0 =100, I=50, c1=0.6. The equilibrium value of Y in a demand-driven economy is 300. E. Assume that Y is initially 400, I is initially 100, and the multiplier is 2.5. I increases by 10%. The multiplier implies that in equilibrium Y will increase by 25%. F. The higher is c1 the larger is the multiplier G. If consumers…
Price Level AD1 AD₂ AD2 Real Domestic Output, GDP Refer to the accompanying graph. What combination would most likely cause a shift from AD1 to AD2? Multiple Choice О an increase in taxes and no change in government spending О a decrease in taxes and a decrease in government spending О a decrease in taxes and an increase in government spending
The data in columns 1 and 2 in the table below are for a private closed economy. (1) (2) (3) (4) (5) (6) Real Domestic Output (GDP = DI), Billions Aggregate Expenditures, Private Closed Economy, Billions Net Exports, Billions Aggregate Expenditures, Private Open Economy, Billions Exports, Billions Imports, Billions $150 $190 $30 $20 200 230 30 20 250 270 30 20 300 310 30 20 350 350 30 20 400 390 30 20 450 430 30 20 500 470 30 20 a. Use columns 1 and 2 to determine the equilibrium GDP for this hypothetical economy. $ billion b. Now open up this economy to international trade by including the export and import figures of columns 3 and 4. Fill in the gray- shaded cells in columns 5 and 6. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. What is the equilibrium GDP for the open economy? billion What is the change in equilibrium GDP caused by the addition of net exports? billion c.…
1) https://hbr.org/2012/01/the-economics-of-well-being 2) https://www.youtube.com/watch?v=PzAr_mL0Qd8 3) https://gnhusa.org/gross-national-happiness/ please I need a short summary of these links.
Suppose that the federal government decides to reduce the budget deficit and cuts government purchases by $200 billion and raise personal income taxes by $200 billion. Suppose the MPC = .5. How much and in which direction would the AD curve shift because of the government spending cut? Show your work. How much and in which direction would the AD curve shift because of the tax increase? Show your work. (Note: we know these numbers in parts A & B are not accurate quantitative assessments of the policy actions - but the exercise allows us to think about the mechanisms through which these policy actions will affect the economy.) Using the above numbers, draw the AS-AD diagram and illustrate the short-run impact of the combined policy action assuming the economy begins at potential output. Label the original equilibrium with point "A" and the new short-run equilibrium with point "B". Be sure to label the magnitude of the curve shift. Describe the impact of the policy action on…
0 $75 150 225 Investment ($) Price Level AS Q₁ Real GDP Investment Demand $50 100 150 Investment ($) AD, (/=$50) Z AD, (/=$150) -AD, (/=$100) Refer to the above diagrams, in which the numbers in parentheses near the AD1, AD2, and AD3 labels indicate the level of investment spending associated with each curve. All figures are in billions. The economy is at point Y on the investment demand curve. Given these conditions, what policy should the Fed pursue to achieve a noninflationary full-employment level of real GDP? 10 S 12 11 13 of 26 ‒‒‒ View previous att Next >
We have the following data for a hypothetical closed economy: GNP = $14,000 Consumption (C) = $8,000 Government Purchases (G) = $1,200 Tax Collections (T) = $1,200 What is the value of private savings SP? $ What is the value of government savings S9? $ (Enter your answer as an integer. Include a minus sign if necessary.) (Enter your answer as an integer. Include a minus sign if necessary.) (Enter your answer as an integer. Include a minus sign if necessary.) In this closed economy, what must be the value of investment expenditure? $
In the country of Arcadia, the minimum amount of consumption spending that will occur in a given year is $50- that is, no matter what level of income households have, the aggregate amount of consumption spending in the economy will be at least $50. In addition, for every extra dollar of national income, consumption spending will increase by $0.75. (Note: For the entirety of this problem, assume that Taxes = trans fers = 0, and the aggregate price level in Arcadia is fixed.) a. What is the marginal propensity to consume in Arcadia? [TYPE YOUR ANSWER BELOW] b. Write out the consumption function for the Arcadian economy. [TYPE YOUR ANSWER BELOW]
15. Total expenditures in a country (in billions of dollars) are increasing at a rate of f(x) = 8.22x+87.13, where x = 0 corresponds to the year 2000. Total expenditures were $1584.9 billion in 2002. a. Find a function that gives the total expenditures x years after 2000. b. What will total expenditures be in 2016? a. What is the function for the total expenditures? F(x)= (Simplify your answer. Use integers or decimals for any numbers in the expression.) b. In 2016, total expenditures will be S (Type an integer or a decimal.) billion.
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