Use the following information to answer questions 21-25. GDP () is 10,000. Consumption (C). is given by the equation C=1,000+0.75(Y-7). Investment (/) is given by the equation /= 1,000-100r, where r is the real interest rate in percent. Taxes (7) are 2,000 and government spending (G) is 2,200. Equilibrium interest rate (r) can be found by setting: Select one: OA S=I OB. Y=C+I+G OC. Both (a) and (b) on None of the aboun

Use the following information to answer questions 21-25. GDP () is 10,000. Consumption (C). is given by the equation C=1,000+0.75(Y-7). Investment (/) is given by the equation /= 1,000-100r, where r is the real interest rate in percent. Taxes (7) are 2,000 and government spending (G) is 2,200. Equilibrium interest rate (r) can be found by setting: Select one: OA S=I OB. Y=C+I+G OC. Both (a) and (b) on None of the aboun

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question A.2: Equilibrium in the goods market The consumption (Ca) and investment (Ia) functions of this economy are: Ca = 10 + 0.8(Y – T) – 40r and %3| Ia = 24 – 50r, where Y = GDP, T = taxes and r is the real rate of interest. %3D a) Government spending (G) is 25 and the budget is balanced. If the real rate of interest is 10%, what is the level of GDP (Y)? Find as well the level of consumption and investment and make sure that they add up to the level of GDP that you found.
When a perfectly competitive industry is taken over by a monopoly, some consumer surplus is transferred to the monopolist in the form of economic profit marginal cost deadweight loss
Suppose that the linear equation for consumption in a hypothetical economy is: C = 60+ 0.35 - Y What is the marginal propensity to save (MPS) in this economy?
(1) Consumption function: C = 100 + .8Y (2) Planned investment: I = 38 (3) Government spending: G = 75 (4) Exports: EX = 25 (5) Imports: IM = .05 Y4 (6) Disposable income: Y = Y- T (7) Taxes: T= 40 (8) Planned aggregate expenditure: AE = C+I+ G+ EX– IM (9) Definition of equilibrium income: Y = AE
Refer to the information provided in Table below to answer the question that follow. Planned Output Net Consumption Investment Government (Income) Taxes Spending Spending Purchases Y 100 500 400 150 150 150 150 50 50 1,000 1,500 2,000 2,500 100 800 100 100 1,200 1,600 2,000 50 50 50 100 150 Refer to Table At an output level of $2,500, there is an unplanned inventory Select one: a. change of $0. b. increase of $200 billion. C. decrease of $200 billion. O d. increase of $300 billion.
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The following table provides some information on government spending (G) and tax revenues (T) at different levels of real GDP in a hypothetical economy. Note: Throughout this problem you can assume, for simplicity, that government transfers are zero. Real GDP (Billions of dollars) 460 GOVERNMENT SPENDING AND TAXES (Billions of dollars) 80 78 76 74 Use the blue line (circle symbols) to plot the government spending schedule presented in the table. Then use the orange line (square symbols) to plot the economy's tax revenues schedule. 72 70 68 → 68 64 62 + 60 500 540 400 420 Government Spending (G) (Billions of dollars) 72 440 72 72 460 480 500 520 540 REAL GDP (Billions of dollars) 560 Tax Revenues (T) (Billions of dollars) 70 580 72 74 600 404-8141 Deficits Surpluses ?
(a) Suppose in a simple Keynesian economy, planned consumption function is given by C=250+0.65(Y-T). Planned investment, government purchases, taxes are $100 million, $100 million and $150 million respectively. What is MPC, MPS and autonomous consumption Derive the saving function. What is the equilibrium level of income? Y= AD=C+I+G If government purchases increase to $150 million, what is the new equilibrium level of income? What level of government purchases is needed to achieve an income of $2000 million? From question e) you get the newly government purchase. Now find out the multiplier value What is the amount of shift in AD curve? [Use the multiplier value from e)] (b) In a self-regulating economy “X”, labor supply is 40 million but labor demand is 10 million. What will happen in goods and service market simultaneously? Explain this situation with relevant graph. Based on your findings in a) is it denoting long run equilibrium? If not, will the economy be able to restore…
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
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
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).