Use the income-expenditure diagram to show how each event change the income-expenditure equilibrium (increase, decrease, or remain unchanged a. The Federal Reserve raises the interest rate b. There is a rise in the expected growth rate of real GDP CAsizable inflow of foreign funds into the country lowers the interest rate
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- In the following table, you are given the following parameters for the economy of Atris: C = 100 + 0.85Y I = 300 G = 150 X = 60 IM = 10 + 0.05Y a) What is the value of expenditures equilibrium? b) What is the value of total leakages and injections at expenditures equilibrium? c) Suppose autonomous expenditure increases by $25. What is the new value of expenditure equilibrium?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…Answer the following questions based on the below graph AE 5000 2000 45 5000 TP Investment I: $400 Government G: $300 AE Taxes T: Net Export NX: $0 $100 a- Graphically determine the equilibrium level of output. b- Derive the consumption and saving functions. c- Mathematically solve for the equilibrium level of income. d- When the economy is at full employment the output level is $5500. How much would government purchases change to create full employment?
- 11Suppose the United States economy is represented by the following equations: Z = C + I + G C = 500 + .5YD T = 600 I = 300 YD = Y - T G = 2000 Given the above variables, calculate the equilibrium level of output. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output? How much does income change as a result of this event? What is the multiplier for this economy?My friend Marie decides to set aside $200 from her paycheck every month. How will this affect her demand curve? (You don't have to use specific numbers, just explain) When Marie sets aside money from her paycheck, this is the same thing as a decrease in her income. Remember that when income increases, the demand curve shifts outwards to reflect the increase in spending. In this case, Marie's demand curve will shift inwards as she tries to economize more than usual. She will buy fewer goods, even if the prices don't change. Illustrate in graph
- Q1: There are two equations for macroeconomic equilibrium in an economy. State them. Show (mathematically) that Savings equals Investment when expenditure equals income. What type of economy would you have when exports equal imports? What happens to the savings-investment relationship if exports are not equal to imports? [This can be greater than or less than]. [Hint: See video lecture on Open Economy Macroeconomics]. Note: Ensure to write out full meanings when you use abbreviations or short forms. This is key to getting full marks.a. Is the equilibrium level of income higher or lower than it was in problem 1(a)? Calculate the new equilibrium level, Y', to verify this. b. Now suppose investment increases to I = 100, just as, in problem 1(d). What is the new equilibrium income? Does this change in investment spending have more or less of an effect on Y than it did in problem 1? Why? Draw a diagram indicating the change in equilibrium income in this case. с. d. 3. Now we look at the role taxes play in determining equilibrium income. Suppose we have an economy of the type in Sections 10-4 and 10-5, described by the following functions: C = 50 +.8YD I = 70 G = 200 TR = 100 1-0-0-20. t = .20 a. Calculate the equilibrium level of income and the multiplier in this model. b. Calculate also the budget surplus, BS. c. Suppose that t increases to .25. What is the new equilibrium income? The new multiplier? d. Calculate the change in the budget surplus. Would you expect the change in the surplus to be more or less if c = .9…q11
- Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Largest MPC to Smallest MPC Answer Bank Colin Barry Al Dan Ernest Name Income change Consumption change Al +$10,000+$10,000 +$6,000+$6,000 Barry +$5,000+$5,000 +$1,600+$1,600 Colin +$2,000+$2,000 +$1,600+$1,600 Dan −$5,000−$5,000 −$3,500−$3,500 Ernest −$10,000−$10,000 −$4,000−$4,000Click on the icon to read the news clip, then complete the following steps. Business inventories fall when real GDP rises because 1800- 1600- Aggregate expenditure (billions of 2002 dollars) ○ A. inventories are falling from above target to their target levels 1400- B. firms put more production time into producing consumption goods and services OC. firms put more production time into producing exports 1200- OD. both B and C are correct 1000- The graph shows the aggregate planned expenditure curve. Draw a new AE curve to show the effect of an increase in exports and business investment. Label it AE₁. 8004 800 1000 1200 1400 45 degree line G AE 1600 1800 Draw a point at the new equilibrium expenditure. Draw an arrow along the new AE curve to show the effect of the increase in real GDP on consumption expenditure. Real GDP (billions of 2002 dollars) >>> Draw only the objects specified in the question. - News clip Business Inventories Decline, GDP Rises Real gross domestic product (GDP)…If the supply of petroleum were reduced by petroleum firms due to rising inventories, we can expect what?