Click to see additional instructionsSuppose for an economyC = 200+.25(Y-200)| = .25Y-1000iG = 150XM= 250And money supply is given byM/P = 2Y-8000iWhile money demand is given byM/P= 1600The equilibrium interest rate and output is given asANS Y=i=

The IS curve shows the negative relationship between interest rate and real GDP where goods market…

Suppose for an economy C = 200+.25(Y-200) | =.25Y-1000i G = 150 XM= 250 And money supply is given by M/P = 2Y-8000i %3D While money demand is given by M/P= 1600 The equilibrium interest rate and output is given as ANS Y=

Suppose for an economy C = 200+.25(Y-200) | =.25Y-1000i G = 150 XM= 250 And money supply is given by M/P = 2Y-8000i %3D While money demand is given by M/P= 1600 The equilibrium interest rate and output is given as ANS Y=

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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supply equation is Y - Ypot + 80 (P-Pe), where Ypot is the potential level of output. In 2016, the population was 400 million, and the structure of the economy was described by the following equations for household consumption behavior and taxes received: C = 100+ 0.8DI, and T = 0. where all monetary values are in billions of dollars. Government spending was fixed at $1700 billion, and firm's investment behavior was fixed at $800 billion. Trading is allowed in this economy and in 2016, trading occurred such that the trade account was balanced. That is, net exports (X-IM) was equal to zero. (Question 15 of 20) Now consider that in in the following year (2017), the government decided to implement a policy aimed at moving the economy to full employment. In its decision to move the economy to full employment, they used government spending as the policy tool. The structure and fixed spending behaviors remain the same as they were in 2016, except for government spending. In addition, changes…
QUESTION ONE Assume that an economy is represented by the following system of equation: C = C₁(Y-T) I = bo + b₂Yb₂i Ma P = C-a *i G = Go T = To Assume that a, bo, b₁,b₂, and c₁ are all positive and that b₁ + b₂ < 1. For simplicity assume that P = 1 Important: Note that unlike in the short run model we have saw in class, money demand depends on consumption, and not on total output. A. Derive an equation for the aggregate demand or the IS-curve in this closed economy and derive an expression for the slope of the IS as showing the relationship between interest rate and output B. Derive an equation for the LM curve and derive an expression for the slope of an LM curve and show the relation between interest rate and output C. Find an expression for equilibrium output and interest rates using answers in questions A and B.
Consider the following macroeconomy. All amounts are in millions (m.) of $: C = 750 + 0.8 YD I = 1200 G = 150 T = 250 Calculate eqm Y and prove that I=sum of S at this equilibrium. What is meant by the “Paradox of Thrift” (POT)? Go back to the original eqm of part a. Now prove using multiplier analysis that the POT holds in this economy by assuming that the change in co is -$50 m. As part of your answer, explain “intuitively” why this paradox exists. Show what happens in the Z-Y space graph.
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Suppose the economy of Ghana in 2020 was characterized by C = ¢400m + 0.75(Y-T); I = ¢400m - 20r; G = ¢200m; T = ¢200m; Ms = ¢250m/P; Md = 0.25Y - 10r a. Derive the IS and LM curve equations. Give a brief explanation as to why they are positively or negatively sloped. b. Calculate equilibrium output and interest rates (in this case assume P=1). Econ313 2020/2021 PROBLEM SET 2 Page 1 of 2 c. Suppose the government of Ghana in the second half of 2020 spent an additional ¢50m to mitigate the impact of the COVID pandemic on households and businesses and government tax revenue declined by 10% as a result of the lockdown in Ghana what will be the new equilibrium output? d. Will the policy in (c) above have an impact on interest rate? Briefly explain. e. What is the amount of the fiscal deficit incurred as a result of the government fiscal policies as pursued in (c) above?
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An economy shows the following featuresConsumption, C = 50 + 0.9YdTax Revenue, T = 100Investment, I = 150 – 5iGovernment Expenditure, G = 100Money demand, L = 0.2Y – 10iMoney Supply, M = 100Exports, X = 20Imports, M = 10 + 0.1YN/BYd is the disposable incomeRequired,(a) Obtain the IS and LM equations of the economy(b) Find the equilibrium income and rate of interest(c) Find the balance of trade
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For an economy the following functions are given : C= 100 + 0.8 y S= - 100 + 0.2 y I = 120 - 5 i M= 120 Md = 0.2y - 5i Find out (1) IS equation, (2) LM equation, (3) equilibrium level of income and interest rate
For an economy, the following information is given to you. C= 0.7(1 -t)Y I 300-0.02r M"/P= 2+0.2Y – 0,3r where C is consumption t is proportion income tax rate, I is investment, M" is money demand, P is price, Y is income (output) and r is real interest rate. If Government expenditure (G) is 479 , tax rate (t) is 14%, price level ( P) is 17, and nominal money supply is 980, the IS-LM equilibrium output is (two decimal points).
Consider a small macroeconomy located near the South Pacific Ocean where the current interest rate is 15 percent and the potential level of real GDP equal to $2.7 billion. Consumers spending behavior is described by the equation: C = 175 + 0.8DI, while firm's investment spending behavior is described by the equation: 1 = 60 +0.25Y-750r. Trade is allowed and currently, total exports is fixed at $150 million while total imports is described by the equation: IM = 320 + 0.1Y. The government's spending is fixed at $840 million and net taxes is described by the equation: T=50 +0.25Y. (Question 4 of 6) Consider that actual rate of unemployment is 5 percent and the current government implements a monetary policy to stabilize the current economic environment. Given the government's policy, what will be the new equilibrium level of GDP (in millions of dollars)? (report your answer at 2 decimal places)
Assume that GDP (Y ) is 5,000 in a closed economy. Consumption (C) is given by the equationC = 1,200 + 0.6(Y −T)−100r, where r is the real interest rate, in percent. Investment (I) is givenby the equation I = 2,000 − 200r. Taxes (T) are 1,000, and government spending (G) is 1,500.(a) What are the equilibrium values of C, I, and r? (b) What are the values of private saving, public saving, and national saving? (c) For the given consumption function, what does the relationship between consumption and theinterest rate imply about the saving schedule?