Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 24, Problem 1.3P
Subpart (a):
To determine
Equilibrium.
Subpart (b):
To determine
Fiscal policy for full employment level.
Subpart (c):
To determine
Fiscal policy for full employment level.
Subpart (d):
To determine
Equilibrium.
Subpart (e):
To determine
Equilibrium
Subpart (f):
To determine
Equilibrium.
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Get an answer from tutors to this homework question now:Assume that in 2008, the following prevails in teh republic of Nurd: Y=$200 G=$0 C=$160 T=$0 S=$40 I=(planned)=$30 Assume that households consume 80 percent of their income, they save 20 percent of their income, MPC+.8, and MPS=.2. That is, C=.8y and S=.2y a. Is the economy of Nurd in equilibrium? What is Nurd's equilibrium evel of income? What is likely to happen in the coming months if the government takes no action? b. If $200 is the full employment level of Y, what fiscal policy might the government follow if its goal is full employment? c. If the full employment level of Y is $250, what fiscal policy might the government follow? d. Suppose Y=$200, C=$160, S=$40, an I=$40. Is Nurd's economy in equilibrium? e. Starting with the situation in part d, suppose the government starts spending $30 every period. If I remains constant, what will happen to the equilibrium level of Nurd's domestic product(Y)? What…
In the country of Borealis, the minimum amount of consumption spending that will occur is $300
- that is, no matter what level of income households have, the aggregate amount of consumption
spending in the economy will be at least $300. In addition, for every extra dollar of national
income, consumption spending will increase by $0.75.
In a closed economy, subsistence consumption is 10 billions, households spend 60% of their net disposable income on leisure consumption, investment is constant at 40 billions, taxes are 20 billions, government spending is 20 billions and the gross domestic product is 145 billions. Assume that suppliers always respond to variations in demand, that it takes them 1 month to adjust to new demand levels and that they make adjustments once per month (if any). One day, the government increases its spending to 30 billions.
After 2 months (at the end of the 2nd month), by how much has the gross domestic product increased?
Select one:
a. 16
b. 25.
c. 32
d. 50
Chapter 24 Solutions
Principles of Economics (12th Edition)
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