Question 1Use the following equations to answer the questions below.The Peruvian economy can be characterized by these equations below.C = 400+ 0.6YdTaxes=600Equilibrium Output = $4,000a) Graph the consumption function in the income/output and aggregate expenditures space.Label your horizontal axis income/output (Y) and your vertical axis (AE). Label thevertical intercept and at least one other coordinate on the consumption function.What is the sum of investment and government purchases at equilibrium? Show yourwork.b)c)d)What is the equation for aggregate expenditure? Graph the aggregate expenditurefunction in the same graph from (a). Label the vertical intercept and equilibrium.At equilibrium, what is the level of saving in Peru? Show your work. On a separategraph, draw the saving function. Label your horizontal axis income/output (Y) and yourvertical axis saving (S). Label the vertical intercept and horizontal intercept.e) The President of Peru hires you as an economic consultant. He is concerned that theoutput level in Vulcan is too high and that this will cause prices to rise. He feels that itis necessary to reduce output by $10 billion. He is given the following 4recommendations for the use of fiscal policya. reduce government purchases by $4 billionb. increase taxes by $10 billionc. reduce government purchases by $10 billiond. increase taxes by $2.5 billionAs part of your explanation to the President of Peru, use the MPC to tell them the bestchoice.

As given C = 400+0.6Yd Taxes = 600 Equilibrium Income = 4000 Note as per our guidelines we can…

Question 1 Use the following equations to answer the questions below. The Peruvian economy can be characterized by these equations below. C=400+ 0.6Yd Taxes = 600 Equilibrium Output = $4,000 a) Graph the consumption function in the income/output and aggregate expenditures space. Label your horizontal axis income/output (Y) and your vertical axis (AE). Label the vertical intercept and at least one other coordinate on the consumption function. b) What is the sum of investment and government purchases at equilibrium? Show your work. c) What is the equation for aggregate expenditure? Graph the aggregate expenditure function in the same graph from (a). Label the vertical intercept and equilibrium. At equilibrium what is the level of saving in Paru? Show your work On a caporata d

Question 1 Use the following equations to answer the questions below. The Peruvian economy can be characterized by these equations below. C=400+ 0.6Yd Taxes = 600 Equilibrium Output = $4,000 a) Graph the consumption function in the income/output and aggregate expenditures space. Label your horizontal axis income/output (Y) and your vertical axis (AE). Label the vertical intercept and at least one other coordinate on the consumption function. b) What is the sum of investment and government purchases at equilibrium? Show your work. c) What is the equation for aggregate expenditure? Graph the aggregate expenditure function in the same graph from (a). Label the vertical intercept and equilibrium. At equilibrium what is the level of saving in Paru? Show your work On a caporata d

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 1 Suppose the system of aggregate expenditures can be described by the following relationships and parameter values. C(Y – T) = 1200 + 0.8(Y – T) I(r) = 100 – 3r G = 200;T = 200; r = 5; Ex = Im = 0 1. In the consumption function, 1200 represents the portion of consumption that is not dependent on disposable income. Suppose something causes households to become concerned about their economic futures and this autonomous consumption falls to 1100. Find the new equilibrium level of Y (output/income).
For the following problem, assume that the MPC, b, takes into account how much consumers spend as total income (Y) in the economy is changes. (Also: Hint GDP = Total Y) So we can rewrite our consumption function as :C= a +bYAssume:a= $2900 billionb=.75GDP= $9,000 billion.A) What is C=B) What is S=C) If consumers were the only ones buying goods in the economy, would the economy have an excess supply of goods, excess demand of goods or would the economy be at equilibrium ?
3. For the following problem, assume that the MPC, b, takes into account how much consumers spend as total income (Y) in the economy is changes. (Also: Hint GDP = Total Y) So we can rewrite our consumption function as : C= a +bY Assume: a= $2900 billion b=.75 GDP= $9,000 billion. A) What is C= B) What is S= C) If consumers were the only ones buying goods in the economy, would the economy have an excess supply of goods, excess demand of goods or would the economy be at equilibrium ?
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Consider the following is the economy of Country Z: C = 200 + 0.85Y I = 100 Answer the following questions: Calculate the equilibrium level of output algebraically using the saving-investment (S-I) approach. (b) What is the value of saving at the equilibrium output from part (a)? (c) Suppose the investment increases to 200. What is the new equilibrium level of output? Calculate the value using the multiplier approach.
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23) Refer to Figure 1.5. As income decreases, consumption decreases by a decreasing amount. If consumption is graphed on the vertical axis and income is graphed on the horizontal axis, the relationship between consumption and income would look like which of the following Panels? A) A B) B C) C D) D Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Consider the following economy. What is the mpc in this economy? Planned Government Net Exports Aggregate Change in Real GDP (Y) Consumption (C) Investment (I') Purchases (G) (NX) Expenditures (AE) Inventories 10000 8200 800 11000 9000 600 12000 9800 13000 14000 15000 800 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 0.50 b 0.75 C 0.80 d 0.90
INTEREST RATE (Percent) Demand LOANABLE FUNDS (Billions of dollars) Supply Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%. Demand Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to and the level of investment spending to Shift the appropriate curve on the graph to reflect this change. The implementation of the new tax credit causes the interest rate to Supply Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government implements a new investment tax credit. This change in spending causes the government to run a budget Shift the…
Suppose the following table shows the components of aggregate expenditure for an economy when disposable income is $200 billion and when it is $400 billion: Disposable Income $200 billion $400 billion Consumption $300 billion $400 billion Investment $100 billion $100 billion Government Purchases $175 billion $175 billion Net Exports $200 billion $180 billion Aggregate Expenditure $775 billion $855 billion On the following graph, use the blue curve to plot government purchases as a function of disposable income: