Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Chapter 25.A, Problem 2TY
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Economics: Principles & Policy
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- I'm just asking for question c, not a or barrow_forwardUse the information below to answer the following questions. Suppose that in China, investment is ¥190 billion, saving is ¥170 billion, government expenditure on goods and services is ¥195 billion, exports are V230 billion, and imports are *270 billion (Y is yuan, the currency of China). The government received billion in tax revenues. The government has a budget investment by and investment. equal to billion which is exerting a(n) the demand for loanable funds, which influence on the real interest ratearrow_forwardProblem 1: You are given the following model for the economy of a country: Consumption function: C=2000+0,75-YDI Investment function: I=10500 Government spending: G = 12000 Tax function: T=200+0,4·Y - Disposable income: YD = Y -T+TR Transfer: 1000 a) What is the level of equilibrium output? b) What is the new equilibrium output if investment decreases by 2 000 units? c) How much does the government collect in taxes when the economy is in equilibrium? d) What is level of the government’s budget? e) Calculate the tax multiplier? f) Calculate consumption at the equilibrium output.arrow_forward
- Question 17 In early 2000, China was the fastest emerging economy in Asia. However, in recent years, China has indicated deteriorating growth beginning of 2020. Suppose consumption function for China is C = 250 +0.6(Y-T) and taxes are T = 15+0.05Y, meanwhile investment is 250, government outlays are 400, and net - export is 300. a) What is the multiplier value for China? b) Suppose China's investment has dropped to 200, government outlays received deduction from the budget by 25% and other components are ceteris paribus. Calculate the national equilibrium new national income equilibrium. c) From the changes that happened in (b) China has reaccelerated export and import activities. This sector has contributed another $100 for net-export, meanwhile other components are ceteris paribus. Calculate national income equilibrium using multiplier approaches.arrow_forwardConsider the hypothetical country of Kejimkujik. Suppose that national income in Kejimkujik is $300 billion, households pay $100 billion in taxes, household consumption is equal to $160 billion, and the marginal propensity to consume (MPC) is 0.6. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Consumption Function050100150200250300350400450500500450400350300250200150100500CONSUMPTION (Billions of dollars)DISPOSABLE INCOME (Billions of dollars) Suppose now that Kejimkujik’s national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6, what is the new amount of household consumption? $148 billion $219.4 billion $220.6 billion $178 billionarrow_forwardThe sub-part a-b was already answeredarrow_forward
- Assume that Consumption is C = c(Y-T); Taxes T = tY; Investment / = -bi; and Government expenditure (G) is exogenous. Determine the multiplier for an increase in the tax rate.arrow_forwardAssume taxes are zero and an economy has a consumption function of C = 0.89 (Yd) + $299.19. How much consumption takes place if disposable income is equal to 4,848.76? Round your answer to two digits after the decimal.arrow_forwardIn a closed economy, GDP is $1000, government purchases are $200, consumption is $700 and the government has a budget surplus of $25. Using the given information calculate: a) investment, b) taxes, c) public saving.arrow_forward
- The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier?arrow_forwardConsider an economy described by the following:Autonomous consumption ( a ) = 100Autonomous Investment = 100Marginal propensity to consume = 0.75 What is the savings function for this economy?arrow_forwardConsider an economy described by the following:Autonomous consumption ( a ) = 100Autonomous Investment = 100Marginal propensity to consume = 0.75 2. What is the consumption function for this economy?arrow_forward
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