Answered: There is a simple national income model…

There is a simple national income model where T denotes tax revenue, t denotes income tax rate. Y= C+lo+Go C= a +b(Y-T), (a>0, 0o, 0

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 outbreak of COVID-19 adversely attacks most economies. Some economists argue that the impacts on the macroeconomy mainly come from (i) the reduction in consumption and investment appetite, while others believe that the impacts mainly come from (ii) the immediate destruction of the supply-chain and production. Suppose two quarters since the outbreak of the COVID-19, changes in selected macroeconomic data of Country X can be summarized as below: Last Year This Year Annualized economic growth rate 4% -6% Unemployment rate 5% 8% Inflation rate 2% 5% Assume that argument (ii) is true, briefly discuss one plausible short-run dilemma facing the central bank of Country X.
1/2 of the population is unemployed with $500 in income; the other 1/2 are employed and earn $50,000 each individual has the utility function: U=4x(1/2) where x=individual's income Proposal 1) government taxes everyone with income at a flat rate of 10%. From the tax revenue, the government will refund the same amount to each person; regardless of their income Proposal 2) government taxes everyone at a flat rate of 10%. It will refund the same amount to each person according to the percentage of taxes paid. Question: compare the proposals under the utilitarian and Rawlsian social welfare functions. How do these proposals rank under each social welfare function? (all calculations can be done on a per-capita basis).
QUESTION 36 1 Q = 1- mpc + mpc •t (C, +1+ G + X„) 1 AQ = 1- mpc+ mpc · t (AC, + AI + AG + AX„) | = 100, G = 200, Ca = 100, Xn -100, mpc = 4/5, t (income tax rate) = 1/4 36. Given this model, what is the equilibrium level of income? 125 300 500 750 1,000
ax policy is one used not only for economic purposes but also for political purposes. It is the opinion of some economists and politicians that the rich should pay more of their income in taxes, and that the resulting fairness from this rise in taxes will lead to more economic growth and a rise in employment. Using the simple expenditure model (Y and Ep, not IS-LM) answer these two questions: One, would a lump-sum tax increase on many high-income households cause GDP to rise in the short run as predicted by the politicians? Why or why not? And two, are there macroeconomic conditions in the simple model under which such a tax increase would be fully warranted? Draw the graphs and explain the outcomes for both cases.
he data below is for the small economy of Christodea in 2015. Consumption: C = 500 + 0.75Y, Net taxes: T = 20 + 0.2Y Planned investment: / = 525 Government expenditure: G = 800 Exports: X = 250 Imports: M = 260 + 0.1Y Calculate the following: a) Government wished to decrease unemployment by increasing national income by 200. How much must government expenditure increase in order to achieve this target? b) Assume an increase in government expenditure of 100 supported by a 100 increase in autonomous taxation, what would be the impact of this fiscal policy on national income? c) Calculate the following after the change in policy in e) above. i) Government budget position. ii) Balance on current account. i) Total consumption
In the aggregate expenditures model, all are true except: a)the price level is shown b)the equilibrium level of GDP can be determined c)the relationship between spending and production is presented d)the actual GDP can be compared to potential GDP
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Read Kiyotaki (1998). Consider the model in section 2 of the paper. Suppose there is no borrowing constraint (i.e., assume 0 is arbitrarily large). Also assume that a = 1.2, ß = 0.9, y = 1.05, d = 0.1, and n = 4. (The notations of variables and parameters follow Kiyotaki (1998). Just in case, & denotes the lower case of Delta in the Greek alphabet.) Reference: Kivotaki, N. (1998). "Credit and Business Cycles." The Japanese Economic Review, volume 49, issue 1, pages 18-35. 1. What is the equilibrium value of the net interest rate in the steady state? (For example, if your answer is 5% in percentage points, then enter 0.05.) 2. Compute the ratio of aggregate borrowing (Bt+1 /rt) to aggregate output (Yt + Y't) in the steady state. (You can assume that this ratio is constant in each period in the steady state.) Notes: Make sure to clarify the notations of variables and parameters in your proof clearly if they are different from those defined in Kiyotaki (1998).
Q4. Consider the national - income model where goods can be produced locally or imported. Local consumers, investors and government in addition to foreign countries are the main customers to these goods. Further, government and external demands for goods and services are considered fixed. Investment and imports depend positively on income linearly and private consumption is also depending on private income. 1. Write the system . 2. Find the exogenous and endogenous variables in the above model. 3. Solve the model
Read Kiyotaki (1998). Consider the model in section 2 of the paper. Suppose there is no borrowing constraint (i.e., assume is arbitrarily large). Also assume that a = 1.2, B=0.9, y = 1.05, 8 = 0.1, and n = 4. (The notations of variables and parameters follow Kiyotaki (1998). Just in case, & denotes the lower case of Delta in the Greek alphabet.) Reference: Kiyotaki, N. (1998). "Credit and Business Cycles." The Japanese Economic Review, volume 49, issue 1, (You can obtain a free electronic copy of this article through the university library's website. If you do not know how, please ask the librarians.) Answer the following questions. pages 18-35.
Which are behavioural equations in the model?
Read Kiyotaki (1998). Consider the model in section 2 of the paper. Suppose there is no borrowing constraint (i.e., assume is arbitrarily large). Also assume that a = 1.2, 3=0.9, y = 1.05, 8 = 0.1, and n = 4. (The notations of variables and parameters follow Kiyotaki (1998). Just in case, & denotes the lower case of Delta in the Greek alphabet.) Reference: Kiyotaki, N. (1998). "Credit and Business Cycles." The Japanese Economic Review, volume 49, issue 1, pages 18-35. (You can obtain a free electronic copy of this article through the university library's website. If you do not know how, please ask the librarians.) Answer the following questions. 1. What is the equilibrium value of the net interest rate in the steady state? Enter your answer in the blank box below. (For example, if your answer is 5% in percentage points, then enter 0.05 in the blank box below.) 2. Compute the ratio of aggregate borrowing (Bt+1/rt) to aggregate output (Yt + Y') in the steady state. (You can assume that…