Suppose the economy of Apple Republic is represented by the following equations: Z = C +I+G C = 500 + .5YD T= 600 | = 300 YD = Y - T G = 2000 (Enter number only into the boxes) a. Given the above variables, calculate the equilibrium level of output (Y) disposable income (Yp) and consumption (C) Hint: First specify (using the above numbers) the demand equation (Z) for this economy. Second, using the equilibrium condition, equate this expression with Y. Once you have done this, solve for the equilibrium level of output (Y). Third, once you get Y, you can T from Y to get YD. Finally, once you get Yp, you substitute it into the consumption equation to get consumption (C).
Suppose the economy of Apple Republic is represented by the following equations: Z = C +I+G C = 500 + .5YD T= 600 | = 300 YD = Y - T G = 2000 (Enter number only into the boxes) a. Given the above variables, calculate the equilibrium level of output (Y) disposable income (Yp) and consumption (C) Hint: First specify (using the above numbers) the demand equation (Z) for this economy. Second, using the equilibrium condition, equate this expression with Y. Once you have done this, solve for the equilibrium level of output (Y). Third, once you get Y, you can T from Y to get YD. Finally, once you get Yp, you substitute it into the consumption equation to get consumption (C).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Suppose the economy of Apple Republic is represented by the following equations:
Z = C +|+ G
C = 500 + .5YD
T= 600
|= 300
YD = Y - T
G = 2000
(Enter number only into the boxes)
a. Given the above variables, calculate the equilibrium level of output (Y)
disposable income (Yp)
and consumption (C)
Hint: First specify (using the above numbers) the demand equation (Z) for this economy. Second, using the equilibrium condition, equate this expression with Y. Once
you have done this, solve for the equilibrium level of output (Y). Third, once you get Y, you can T from Y to get Yp. Finally, once you get Yp, you substitute it into the
consumption equation to get consumption (C).
b. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output (Y)
? What is the multiplier
for this economy
c. Now, assume that G is still at 2000, but taxes increase from 600 to 700. What is the new equilibrium level of output (Y)
? What is the multiplier
for this economy
d. Now, assume that G=2000 and T=600, but consumer confidence decreases causing a reduction in autonomous consumption (co) from 500 to 400. What is the new
equilibrium level of output (Y)
? What is the multiplier for this economy
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education