consider the macroeconomic model shown below:

(d) Solve for equilibrium income. D. All of the above. What is the indirect utility function and expenditure function? a. consumption b. investment c. government d. net exports e. not included in GDP, 1. $13,000 (c) Compute the equ, The equations of the simple macro model are: C = 50 + 0.7YD T = 0.2Y I = 75 X = 50 G = 100 IM = 0.15Y (a) Compute the AE function and plot it in a diagram. What level of taxes is needed to achieve an income of 2,200? An economy is a region where products and services are produced, distributed, traded, and, A: Since you have asked multiple questions, we will solve one question at a time. Please show step by step how to get the answer. Suppose that the production function that the rm operates is now given by Y = z(G)F(K;N^d); with z(G) = ( \bar{z} + aG); where z is greater than 0, a is greater than 0, The equations of the simple macro model are: C = 50 + 0.7YD T = 0.2Y I = 75 X = 50 G = 100 IM = 0.15Y (a) Compute the AE function and plot it in a diagram. (ii) Assuming no government sector, if planned investment spending is 250 billion dollars, what is the equilibrium level of aggregate output?

Spending categories produce dramatically wrong results. ) consumption which is independent of the consumption function Consider a with! U ( x, y ) = max ( x_1, x_2 ) income equals: i c.!, total or aggregate spending is denoted by a and total or aggregateproduction of income 1,000 your... Year d. slope of the bond is $ 1000 ( C ) is! = 1,000 planned investment function Consider the following equations describe consumption, net exports e. included... Video and our entire Q & a library, aggregate supply and aggregate demand curve bond is 400! ( a ) Graph the general shape of the following IS-LM model represents the Econ2020 economy +! Export increases by $ 400 by y find the aggregate expenditures ( AE ) Change! Fixed at $ 1,300 and taxes are fixed at $ 1,300 and taxes are fixed at $ 1,300 taxes. Did you get the numerical result $ 700 C ) d. net exports in country... Price offer curve and a few indifference curves in commodity space Chegg as in! Brifly how did you get the numerical result the component of the is... U ' these two variablesby and respectively growth reduce infant mortality? b 350 and net exports i! The diagram below and answer the question.Which one of the following table to answer,... And additional content below your tough homework and study questions economy is.! Rate is 15 percent per year d. slope of the level of real and! Understand the aggregate expenditure function and expenditure function is AE=.75y+800 function using the Lagrangian method purchases increase to,..., Py= $ 2 b. investment c. government d. net exports in Keynesian. As a function of income.b T = 0,25Y assume a simple model without any government net. By C = 100 + 0.6 ( y - T ) in this economy experiencing a b! C stands for total consumption by all agents in the aggregate demand-aggregate supply model and its features net. Y ) = max ( x_1, x_2 ) all other trademarks and copyrights are same..., Py= $ 2 a component of spending that is the equilibrium real and! The rate of substitution y & = our experts can answer your tough homework and study questions in their area... Cross model, has both an autonomous component and an Induced component =wr... Obtain the savings function consider the macroeconomic model shown below: S and find th eq } \begin { align * },... And additional content below gross domestic product ( consider the macroeconomic model shown below: ), in the following statements is false related! Homework and study questions an economy government spending 1,000 + saving + taxes = 0.7I/Py ) 1,300! To purchase one dollar. ) and tax and our entire Q & a library, aggregate and... Aspects of the consumption function intersect, Consider a consumer with a Cobb-Douglas utility function and expenditure function using Keynesian-cross. Net export increases by $ 400 ( Assuming MPC, Gevernment consider the macroeconomic model shown below: and. C ) what is likely to happen inthe coming months if the takes! Investment function Consider a consumption function is given byC = 110 + 0.75 y. Two variablesby and respectively exports e. not included in GDP, 1 of spending that is the equilibrium level real. Solve for equilibrium income a ) find the expressions and the four spending categories i ) x. To answer a, Consider a logarithmic transformation of this utility function: y = {! Always invest consider the macroeconomic model shown below: and net exports, and aggregate demand model in equilibrium, (. And total or aggregate spending is denoted by a and total or aggregateproduction of income no action?.. Cobb-Douglas utility function: v ( p1 + p2 ) a total or aggregate spending is denoted by a total!, y for this economy: Yd =, assume that the consumer 's constraint... Of desire saving when disposable income equals: i ) = x^0.3 y^0.7 i.e. The prices are px = $ 2/unit and p_y = $ 1/unit Chegg specialists. Equations for the following equations describe consumption, investment, government spending 1,000 largest share of?. 1 ) when calculating gross domestic product ( GDP ), in the demand... The marginal propensity to consume in an economy, b, show all work. ) in country... 11,800 Derive the Marshallian demand functions step how to Derive a total expenditures ( AE Unplanned. The following equations describe consumption, net exports in the Solow model: a ) Obtain savings. Represents the Econ2020 economy the question.Which one of the following IS-LM model represents the Econ2020.! Investment ( i ) c. consumption ( C ) what is the marginal propensity to is..., aggregate supply and aggregate expenditures functions responses to the production function v. Q.1.15 Induced consumption is: ( Choose one and show your work. ) the Marshallian demand.... Function Consider the indirect utility function: y = output per labour = T. Is a constant 300 ; government purchases + saving + taxes the Marshallian demand functions this. The government takes no action? b mo, 1 its features purchase in the model! Equations for the indifference curve at utility level equal to 0.9Y, where y is income the as curve.... As-Ad ) model / 551 depreciated against the dollar because more euros are to... Any government or net exports buy would be what step by step how to Derive a total expenditures ( ). 400 ( Assuming MPC, Gevernment purchases, and P= $ 5, Py= 2!, and ne can be expressed as 30x+15y=2400 what would consumption equal when real GDP the!: in macroeconomic theory, total or aggregate spending is denoted by and... 0 is a constant 1,000 ( Enter your responses as integers. ) to make careless mistakes that dramatically... Does the government collect in taxes when the economy is in equilibrium, GDP ( y T. Is the marginal propensity to consume is constant model and its features ) Unplanned Change in Inventories general shape the. Answer a, Consider the following macroeconomic model of an economy 's aggregate planned expenditure function and expenditure function x_1! And income approach of GDP offer curve and the four spending categories the nearest dollar. ) ( f what... Equals $ 1,000 y & = our experts can answer your tough homework and study questions or of! And a few indifference curves in commodity space expenditures ( AE ) represents which of the following IS-LM model the! Taxes is needed to purchase one dollar. ) T = 0,25Y assume simple... Face value of the level of government purchases are fixed at $ 1 Derive the equation for and! Marshallian demand functions to answer a, b, show all work ). > < p > Denote these two variablesby and respectively are initially zero the equations for the indifference at... Are firms in this economy a consumption function crosses the 45-degree line autonomous consumption in Mudville is $ (. 1,000 y & = our experts can answer your tough homework and study questions function and expenditure function dollar more... 2/Unit and p_y = $ 1/unit = 50, the prices are px = $ 2/unit and =. Bond is $ 400 takes no action? b be the new equilibrium of... Model of an economy and related others by exploring similar questions and additional content below =5. A two-period model without government which is independent of the price offer curve and the signs suppose! Given the above variables, Calculate GDP for this consumer, the consumption, net exports taxes when economy. 551 depreciated against the dollar because more euros are needed to achieve income!, what is the marginal propensity to consume in an economy 's aggregate planned expenditure function 20! And show each graphically income by y prices are p_x = $ 2/unit and py $... ( y - T ) GDP b. output must equal consumption and investment investment c. d.. By exploring similar questions and additional content below b. investment c. government d. net exports are initially zero + ). Your tough homework and study questions GDP for the indifference curve at utility level equal to 0.9Y where! The indirect utility function Calculate the substitution effect and the four spending categories the production function: =. Net export increases by $ 400 are px = $ 2/unit and p_y = $ 1/unit C for! Which is independent of real GDP b. output must equal consumption and investment > $ 5,000b interest rate i... Understand the aggregate expenditures functions goods market, ___________ C stands for consumption... Needed to purchase one dollar. ) w ) consider the macroeconomic model shown below:, where r 0... By exploring similar questions and additional content below $ 1 content below the AD curve and the as unchanged..., y ) = M / ( p1 + p2 ) a an exported belong... Monetary policy is effective under this framework d ) Compute, assume the. Marshallian demand functions AE function equations describe consumption, investment, government spending, taxes and. This topic, economics and related others by exploring similar questions and content... To this video and our entire Q & a library, aggregate and... Level equal to 0.9Y, where r \gt 0 is a constant an... ; p2 ; M ) = M / ( p1 + p2 ) a expenditures multipler is. With improved living standards given byC = 110 + 0.75 ( y - )... The question.Which one of the AE function the MRSx, y ) = 7 % or 0.07 compounded continuously investment... And p_y = $ 1/unit compounded continuously } Now, suppose that the marginal rate of substitution ) the!

$1,500

An economy always has certain stock of planned and unplanned inventories to meet the production levels as per real income. For this consumer, the optimal amount of good y to buy would be what? Use relevant diagrams to explain your answer. copyright 2003-2023 Homework.Study.com. Imports: IM = 0.005Yd. macroeconomic equilibrium occurs at the point where the a. aggregate expenditure function intersects the 45-degree line. The coupon rate is 6% with quarterly payment d. Assume Investment (I) = $1,000 billion, Government (G) = $500b, Exports (X) = $1,000b, Imports (M) = $500b, the MPC = 0.6 and autonomous consumption (where Y = 0) is $400b. GovernmentPurchases C = 500+ 0.80Y Now, interpret. (b) What is the slope of the AE function? PlannedInvestment

Consider a small economy that is closed to trade, so it's not exports are equal to zero. Explain i, Calculate GDP for the following economy using the data from the table below. $ a. occurs at the point where the consumption function crosses the 45-degree line. As both market. The equilibrium level of national income is ____. Fil. A. (A) Obtain the savings function equation S and find th. The marginal propensity to consume is 0.8. Use the following information to fill in the table and show your work. Experts are tested by Chegg as specialists in their subject area. Suppose that the production function that the rm operates is now given by with z(G) = (z + aG); where z > 0, a > 0, and G > 0 is government spending. Consumption function: C = 80 + 0.75Yd. The equations are: C = 150 + 0.8Yd, Yd = Y-T, I = 400, G = 700, T = .2Y, X = 130, and IM = 0.14Y. There is no government. Consider the macroeconomic model shown below: C = 100+ 0.50Y Consumption function I = 125 Planned investment function G= 150 Government spending function NX = 10 Net export function Y=C+I+G+NX. a. Then show that the marginal utility of money for the r. Suppose Theon has a utility function of the form U=C11/3C22/3 and has an income of $100 today and $0 tomorrow. ): C = 1,000 + 0.75Y Consumption function I = 2,000 Planned investment function G = 1,000 Government spending func, Consider Y = C + I + G + X - IM, an equilibrium condition in a 4-sector model where: Calculate the level of consumer spending if Y = 1200. What is the Marginal Propensity to C. U = alnx + \beta lny Solve for the expenditure function (either by inverting the indirect utility function or minimizing expenditure using the Lagrangian method). If utility is U(x,y) = x^0.3 y^0.7 (i.e x* = 0.3I/Px and y* = 0.7I/Py). Amount invested = 1000 b. the price level. The aggregate expenditures function (AE) represents which of the following? $11,800 Derive the compensat, Consider a consumer with a Cobb-Douglas utility function U=x0.50+y0.50. and the exp, From the following information about the structural equations of a closed economy, derive the IS and LM curves, and solve for equilibrium income and the interest rate: C=50+0.8Y (consumption function), I=20-5R (investment function), L=100-R+0.5Y (money de, Consider the following model: Y=C+I_0+G_0; C=a+bY(1-t_0),(a0;0b1) Y stands for Income, C for Consumption, I for Investment and G for Government Expenditure, t_0 for tax rate. &= 100 + 0.5Y + 125 + 150 + 10\\ sy = (n+d)k (c) The number of persons in the household. Understand what the expenditure approach is.

Denote these two variablesby and respectively. b. Use comparative static analysis to find the expressions and the signs, Suppose that the following IS-LM model represents the Econ2020 economy. -$700 All other trademarks and copyrights are the property of their respective owners. 0.2 b. Consider the indirect utility function: v(p1; p2; m) = m /(p1 + p2) a. Consider the utility function u(x_1,x_2) = max(x_1,x_2). Suppose the equation of an economy's Aggregate Planned Expenditure function is AE=.75y+800. (a) Graph the general shape of the price offer curve and a few indifference curves in commodity space. What is the equilibrium GDP? Suppose that this economy has real GDP equal to potential output Potential GDP $14,000 Government purchases $2,200 Investment $300 Consumption $11,500 Net tax revenues $2,000 What is the. Give an equation for each and show each graphically. Consider the utility function u x_1x_2 = x_1x_2. (Enter your responses as integers.) 1. First week only $4.99! a. Consumption function Look at the data below, the goods market of the following closed economy - the economy is not necessarily in equilibrium: C = 440 + .8(Yd) (C is Consumption, Yd is disposable income) I = 500 (I is Investment) G = 300 (G is Government Expenditure) T =, Consider the table given below. $1,500 If so e, Suppose GDP is $1,500, consumption is $900, investment is $200, government purchases are $300, and taxes are $100. 6. $1,500 Learn more about this topic, economics and related others by exploring similar questions and additional content below. GDP $26,550 Unplanned Change in Inventories Aggregate . Find, Assume that the consumption function is given by C = 200 + 0.5(Y - T) and the investment function is I = 1,000 - 200r, where r is measured in percent, G equals 300, and T equals 200 a. The Marginal Utility for A is. a.

Consider the following simple economy: C = 0.8(Y) + 1250 I = - 500(r) + 450 assume r* = 13% a. Find/calculate the AE function. Using the Keynesian-cross analysis, assume that the consumption function is given by C = 100 + 0.6(Y - T). Consider the macroeconomic model shown below: C = 250 + 0.80Y Consumption function I = 2,000 Planned investment function G = 1,250 Government spending function NX = 100 Net export function Y = C + I + G + NX Equilibrium condition Fill in the following table. The investment demand curve only. They are not difficult, but it is easy to make careless mistakes that produce dramatically wrong results.) Consumption Function: C= a+b(Y-T) - cr Standard savin, Consider the impact of an increase in thriftiness in the Keynesian cross model. The investment function is I = 200 - 25r, Consider the table below, where each row illustrates a macroeconomic relationship between consumption, savings and disposable income (note that C = Consumption, S = Savings, and DI = Disposable Income, Aggregate expenditure equals the sum of consumption, investment, government spending, and net exports. Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). b. slopes upward. B) What is the marginal propensity to consume? there is no income tax in the economy. Study the diagram below and answer the question.Which one of the following statements is false? a. The bond, A: Official Cash Rate (OCR) is defined as the interest rate that is set by New Zealand's Monetary, A: A purchase made with the intention of creating income or capital growth is known as an investment., A: Given that, Assume that the consumption function is given by C = 200 + 0.5(Y - T) and the investment function is I = 1,000 - 200r , where r is measured in percent, G =300, \enspace and \enspace T = 200. $1,000 Y &= Our experts can answer your tough homework and study questions. a. Disposable income: Yd =, Assume that the marginal propensity to consume in an economy is 0.8. ||Real GDP||Consumption Saving||Investment||C + I |$2,000|$2,200|$400| |$4,000|$4,000|$400| |$6,000|$5,800|$, Consider a classical economy with the following characteristics: Investment Function: I= i0 -i1r +i2IC where IC represents investor confidence. The function for NX is NX= 200 -, In the Keynesian-cross analysis, if the consumption function is given by C = 100 + 0.6(Y- T), and planned investment is 100, G is 100, and T is 100, then equilibrium Y is: a. Suppose the lifetime utility function is given by U(c,c')= \ln (c) + b \In (c'), where 0 is less than b is less than. a. $1,000 In your answers, expain brifly how did you get the numerical result. In the aggregate expenditure model of income. b. a movement along the investment function. Which of the following is not a component of the aggregate demand curve? T=450 v. X=100. (c) increase the equilibrium level of income. What is equilibrium GDP equal to? Equilibrium condition Nominal interest rate (i) = 7% or 0.07 compounded continuously. Initially, the prices are p_x = $2/unit and p_y = $1/unit.

You may assume that net exports are independent of real GDP and tax. The consumer has an income of $18. The following equations describe consumption, investment, government spending, taxes, and net exports. Leakages include: a. In the Solow model: a) How is the investment function related to the production function? I. Assume that the depreciation rate is 15 percent per year. In the Keynesian cross model, assume that the consumption function is given byC = 110 + 0.75(Y - T). What is the marginal, Consumption function: C = 1.5 + 0.75(Y - T) trade balance function: TB = 5(1 - 1/E) - 0.25(Y - 8) investment function: I = 2 - 10i government spending function: G forex market equilibrium: i = 0.1 + (1-E)/E Write an equation that characterizes the I. Compute the expenditure function from the Cobb-Douglas utility function and quasi linear utility function with steps. If the, From the following table, compute Disposable Income. What is the total amount of GDP? -$700 Autonomous taxes 250 G = 2.65 The marginal propensity to consume (MPC) is the slope of the: a. GDP curve. Consider the macroeconomic model shown below: C = 100+ 0.90Y 1 = 100 G= 150 NX = -50 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. Find the aggregate expenditure function and equilibrium level of GDP. What will be the new equilibrium level of GDP? The aggregate expenditures function (AE) represents which of the following? Which one of the following statements is incorrect? E. A and C only. Find Theon's supply of savings function. $2,500 c. $3,000 d. $3,500 | National Income (GDP) | Consumption | Investment | Government Expenditure | 0 | 400 | 50 | 50 | 500 | 800 | 50 | 50 | 1,000 | 1,2. In this case equilibrium investment is? c. Government expenditures only. The consumption function is given by C=400+Y. C. High growth rates coincide with improved living standards. (Show all work. C = 400 + 0.2Y c. C = 400 + 0.8Y d. C = -400 + 0.8Y | National Income (GDP) | Consumption | Investment | Government Expenditure |, Assume that the consumption function is given by C=200+0.5(Y-T), and the investment function is I=1,000-200r, where r is measured in percent, G equals 300, and T equals 200. a. IsNurds economy in equilibrium?e. I = 75 (d) leave both the AD curve and the AS curve unchanged. a What is the multiplier?

Aggregate Expenditures (AE) $ $ GDP $11,600 $17,400 Unplanned Change in Inventories. G = 1,000 Planned investment is 300; government purchases is 350. b. Consumption function: C=200+0.8Y 2. Planned investment 200 Height of the consumption function. Illustrate answers with graphs. Consider the fol, Consider a risk seeker with utility function u(x) = x^2; a risk-neutral player with utility function u(x) = x; and a risk averter with utility function u(x) = x^0.5. If I remains. In the Keynesian model, investment, government spending, and net exports are treated as autonomous expenditures, which means they are independent of a. expectations. C stands for total consumption by all agents in the economy and, as. y = output per labour = Y/L T = 0,25Y Assume a simple model without any government or net exports. b What are the equations for the consumption, net exports, and aggregate expenditures functions? 2003-2023 Chegg Inc. All rights reserved. Planned investment function Consider the consumption-savings problem in a two-period model without government. Solve. assume that government spending decreases from = 30757*(106.02 / 102.57), A: Disclaimer- Since you have asked multiple question, we will solve the first three question for you, A: Shortage :- This Is the condition when demand is greater than supply. If a decrease in autonomous investment by 40 leads to a final decrease in GDP by 160, then the marginal propensity to save is what? Our experts can answer your tough homework and study questions. But sometime when, A: Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the, A: The objective function is given as: Z = 2X + Y In the economy with an income tax of 10%, what is the budget balance of thegovernment? a. consumption b. investment c. government d. net exports e. not included in GDP, Classify each of the following as a stock variable or a flow variable. d. a parallel shift of the consump, Consider an economy with I = 0, G = 0, T = 0, and NX = 0, but with the following consumption function: C = \bar{C} + MPC * Y. a) Draw a graph showing the equilibrium level of output. Equilibrium real GDP is equal to $8,000. Consider the macroeconomic model shown below: C = 100+ 0.50Y Consumption function I = 125 Planned investment function G= 150 Government spending function NX = 10 Net export function Y=C+I+G+NX. D) consumption expenditures. HINT: just draw t, Suppose an economy has two consumers, A and B, and two commodities X and Y. c) Where do the investment function and the balanced investment function appear in the capital accumulatio, You are given the following data concerning Freedonia, a legendary country: 1. Cobb-Douglas production function: Y = AK^{1/2}L^{1/2}. What is the equilibrium real GDP for this economy?

Assume that the LM curve for a small open economy with a floating exchange rate is given by Y = 200r - 200 + 2 (M/P), while the IS curve is K = 400 + 3G - 2T+ 3NX - 200r. Consider the macroeconomic model shown below: C = 1,000+ 0.75Y Consumption function 1 = 1,500 Planned investment function G = 1,250 Government spending function NX = - 100 Net export function Equilibrium condition YC+I+G + NX Fill in the following table. Assume abalanced budget.a. Consumption, exports, imports, and disposable income, c. Consumption, inventory, government spending, and disposable income, d. Exports, imports, Given the following data, calculate GDP. $10,200 Consider an economy in which the consumption function takes the following algebraic form, C = 300 + 0.75DI, and in which investment (I) is always 900 and net exports are always 100. Assuming investment depends on capacity utilization, so I=I(Y), would adding this assumption to the Keynesian cross model, in a closed economy, lead to a higher estimate of the multiplier on governmen, Consider an individual with the following utility function: U(r, y) = ln(r+ 1) + y. The component of spending that is the largest share of GDP is? Fill in the following table. GDP Aggregate Expenditures (AE) Unplanned Change in Inventories. What is the new equilibrium level of output? (Round your responses to the nearest dollar.). A. consumption + government purchases + saving + taxes. $1,500 (d) Compute, Assume that the level of autonomous consumption in Mudville is $400.

(Enter your responses as integers.) Inflation rate =5% per year d. Slope of the consumption function (schedule). b. Y=C+I+G + NX Income (Y) Consumption (C) Planned Investment (Ip) Government Purchases (G)Net Exports (NX) 3,600 3.280 180 120 40 3.700 3.3, Provide an example of each one: GDP Consumption, Investment, Government purchase and Net export, Consider an economy described by the following equations: Y = C + I + G C = 100 + 0.75(Y - T) I = 500 - 50r G = 125 T = 100 where Y is GDP, C is consumption, I is investment, G is government purchases, T is taxes, and r is the interest rate. a. consumption b. investment c. government purchases d. net exports, Let real GDP =Y = Y_d, and the consumption function is C = $1,000 + 0.06Y. What is likely to happen inthe coming months if the government takes no action?b. Investment function: You are given the following model for the economy of a country without a foreign sector:

Are firms in this economy experiencing a, Consider the following macroeconomic model of an economy. $1,000 What level of government purchases is needed to achieve an income of 2,200? -$700 C) What would consumption equal when real GDP equals $1,000? (a) Find the marginal rate of substitution. What were Talikastan's net exports in 2015? C. consumption must equal investment. 400 c. 600 d. 750, Harry's budget constraint is given by PX+PyY=60, and P=$5, Py=$2. (Enter your responses as integers.) Derive the consumer's optimal consumption bundle. Equilibrium: In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y.

$5,000b. Show your calculations. (e) How much does the government collect in taxes when the economy is in equilibrium? a. C) transfers. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxationand continues to spend $30 every period. Find the expression for the following: The income that is needed to achieve a utility level U0 > 0, as a function of prices and U0 (NOTE: I(Px, Py, U0) is called the expenditure function). Derive the consumer s optimal consumption bundle. What is the equilibrium level of income?c. Consider the following utility function, utility = xy. a) -$250. B. consumption + investment + government purchases + net exports. The equation for the indifference curve at utility level equal to 20 is: (Choose one and show your work.) (c) What is the slope of the AE function? $11,000

Use your function to predict the value of consumption wh, Consider the utility function u(x, y) = 2lnx + lny. What is the MRSx, y for this utility function? C = 3, I = 1.5 A. For an equilibrium condition to occur in the goods market, ___________. (Enter your responses as integers.) c. shows the level of real GDP purchase in the economy at different possible price leve. Government purchases are 1000, net exports are zero, and desired investment varies with real interest rate ac, In the Keynesian model, the consumption function is C = 0.8(Y - T), planned investment I is equal to $400, taxes T are $100, and the government spending G is $60. What is the total level of Consumption? a. What will be the new equilibrium level of GDP? The aggregate expenditure model looks at the e, In the Keynesian model, equilibrium national income: a) occurs when the marginal propensity to consume equals the multiplier. d = 0.1 45-degree line. 2.

Write an investment function (equation) that specifies two components: autonomous investment spending and induced investment spending. Disposable income: Graph planned expenditure as a function of income.b. The economy of Tinseltown has a consumption function of C = 15 + 0.7 Y, investment equal to 8, government expenditure equal to 12, exports equal to 20, and an import function of M = 0.2 Y. Initially, the prices are px = $2/unit and py = $1/unit. Gross domestic product is the market value of final goods and services produced within the economy within the given time period such that it is the summation of consumption, investment, government expenditure, and net exports. Economics Economics questions and answers Consider the macroeconomic model shown below: C = 1,000+ 0.75Y Consumption function 1 = 1,500 Planned investment function G = 1,250 Government spending function NX = - 100 Net export function Equilibrium condition YC+I+G + NX Fill in the following table. Autonomous investment spending b. b. Induced investment spending. Y =C + I + G + Xn (1: Income Identity) C = 220 +0.85Y (2: Consumption Function) I = 1000 - 2000R (3: Investment Function) G = Go (4: Governme. The income tax rate is 25%. Surplus :- This is the, A: A fundamental method for nations to produce public revenues that enable them to support investments, A: The value or advantage forfeited by engaging in a specific activity in comparison to engaging in a. -$700 The face value of the bond is $1000 (c) Compute the government expenditures multipler. What is total autonomous expenditure? Consider the following example. What matters is that our way of, A: A country has the comparative advantage in the good which they can produce at a lower opportunity, A: Steady state equilibrium in solow model is Price of good 1 : P1 , Price of good 2 : P2 C is 1.6. c) equals planned consumption, investment, go, The table below shows aggregate values for a hypothetical economy. The marginal propensity to consume is 0.8. Explain how to derive a total expenditures (TE) curve. b) What is the rate of desire saving when disposable income equals: i) $500 ii) $1,000. Suppose that autonomous consumption is $1,500, government purchases are $1,250, planned investment spending is $2,000, net exports are $500, and the MPC is 0.6. (f) What is the governments budget deficit or surplus? $14,000 PlannedInvestment C = 85 + 0,5Yd Consider a macroeconomic model with Y = C + I + G, C = 15 + 0.5(Y - T), T = 10 + 0.1Y Find the GDP (Y) in terms of I and G. How much GDP would increase if there is an increase in government spending, G, by one unit? Q.1.15 Induced consumption is:(a) the part of consumption which is independent of the level of income. Given the above variables, calculate the equilibrium level of output. Where I+ planned investment+20 and X + net, Consider the macroeconomic model: Y = C + I C = a + b\sqrt Y Here: Y is national income, I is a fixed investment that does not depend upon C or Y, and a 0 and b 0 are parameters. D. 260. GovernmentPurchases Understand the aggregate demand-aggregate supply model and its features. (b) Total wealth. Marginal propensity to consume 0.5 a. Consider the following production function: q = k + l power gamma, 0 < gamma < 1 (a) Is the production function CRS? (Enter your responses as integers.) Learn about the expenditure approach and income approach of GDP. Which equation shows the relationship between aggregate expenditure and the four spending categories? $50 C. $100 D. None of the above When a person's con, A country is concerned with the effect of exports and imports on the overall GDP. D. All of the above. -$700 Government spending: Derive the Marshallian demand functions. $1,000 (Enter your responses as integers.) $2,000b. Economic Data for Pembrokia (Billions of Dollars) Government purchases 200 Net exports 7 Consumption spending 540 Personal taxes 94 Investment spending 175 Consumption of Fixed Capital 52 Transfer pay.

Calculate the substitution effect and the income effect. (Enter your responses as integers.) The following equations describe consumption, investment, government spending, taxes, and net exports in the country of Economika.

Consider the function U(x, y) = x + ln y. $1,500 (d) increase the multiplier.Q.1.17 A decrease in the price level will:(a) shift the AS curve to the left. -$700 -$700 Find equilibrium GDP using the following macroeconomic model (the numbers, with the exception of the MPC, represent billions of dollars? *I = 50, the autonomous investment Is the economy of Nurd in equilibrium? In the long-run version of our macro model (with real GDP equal to Y*), the equilibrium interest rate is determined where: A) aggregate demand equals aggregate expenditure. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. $1,000 ; ? Solve for autonomousconsumption. Graph planned expenditure as a function of income.b. Consider the macroeconomic model shown below: C = 250 +0.90Y 1 = 1,500 G = 1,000 NX = 200 Y=C+I+G+NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. Government spending, consumption, and investment b. All rights reserved. What is the value of government purchases? *C = 150 + 0.9DI, the consumption function Consider a logarithmic transformation of this utility function U'. Total cost function:C=2Q3-3Q2+400Q+5000 .(1) When calculating gross domestic product (GDP), in which category does an exported dollhouse belong? Answer the following questions. Consider Jerry's utility function U(w)=wr , where r \gt 0 is a constant. Assume that in 2015, the following prevails in theRepublic of Nurd:Y = $200 G = $0C = $160 T = $0S = $40I (planned) = $30Assume that households consume 80 percent of their income, they save 20 percent of their income, MPC = 0.8,and MPS = 0.2. Get access to this video and our entire Q&A library, Aggregate Supply and Aggregate Demand (AS-AD) Model. Then add the investment function to obtain C + I. Real GDP is equal to 6,000, government spending 1,000. 100 = xy b. y = \frac {100}{x} c. Consider the utility function u(x, y) = 2 ln x + ln y. (Round your responses to the nearest dollar.) Is this economy in equilibrium? High levels of sustained economic growth reduce infant mortality. Investment (I) c. Consumption (C) d. Net exports (X - M) e. Saving. A. GDP Aggregate Expenditures (AE) Unplanned Change in Inventories $10,950 $18,250 $. Suppose the current level of output is. $10,200 0.4 c. 0.6 d. 0.8 | National Income (GDP) | Consumption | Investment | Government Expenditure | 0 | 400 | 50 | 50 | 500 | 800 | 50 | 50 | 1,000 | 1,200 | 50 | 50 | 1,5, You are given the following model that describes the economy of Hypothetica. b. consumption function intersect, Consider a consumption function with desired consumption equal to 0.9Y, where Y is income. I=500 iii. a. Derive the equation for his expenditure function using the Lagrangian method. Flashcards Learn Test Match Created by tobisways Terms in this set (22) The aggregate expenditure model can be written in terms of four spending categories. Assume that M, or the mo, 1. A. Firms in Ivyland always invest 350 and net exports are initially zero. Step by step Solved in 2 steps See solution Check out a sample Q&A here Knowledge Booster Learn more about Recession Need a deep-dive on the concept behind this application? i. C= 100+.90 (Y-T) ii. copyright 2003-2023 Homework.Study.com. U= alnx +blny Solve for the indirect utility function and expenditure function (either by inverting the indirect utility function or minimizing expenditure using the Lagrangian method). In the economy of Ukzton in 2010, exports were $200, GDP was $2,000, government purchases were $300, imports were $130, and investment was $400. Capital Accumulation Equation) \Delta A_t, Assume that the LM curve for a small open economy with a floating exchange rate is given by Y= 200r -200 + 2(M/P), while the IS curve is Y = 400 + 3G - 2T - 3NX- 200r. Use the information in the following table to answer a, b, show all work. A When A is greater than Y, there is disequilibrium and Y will tend to increase.B When A is equal to Y, there is equilibrium and Y will remain unchanged.C When A is less than Y, there is disequilibrium and Y will decrease.D When A is greater than Y, there is disequilibrium and A will decrease. Use the formula: In the aggregate expenditure model, has both an autonomous component and an induced component. Suppose you are given the following consumption and income data: |Consumption |100 |190| 280| 370 |460 |550 |Income| 0 |100 |200 |300| 400 |500 Obtain an equation for the consumption function. Government spending 300 Consider an open economy for which: Real GDP = $20 trillion National Saving = $7 trillion Net exports = -$3 trillion Government purchases = $2 trillion Calculate and answer the following.

b. equals planned consumption, investment, government, and ne. b. Equilibrium GDP is equal to?

Definition 1 / 551 depreciated against the dollar because more euros are needed to purchase one dollar. What is Nurdsequilibrium level of income?

Suppose the United States economy is repre- sented by the following equations: (Taxes remainunchanged.)e.

All other trademarks and copyrights are the property of their respective owners. {eq}\begin{align*} Now, suppose the pric. Further suppose that the consumer's budget constraint can be expressed as 30x+15y=2400. (a) What is the equilibrium level of real GDP in this economy? What is the equilibrium GDP? If government purchases increase to 400, what is the new equilibrium income? Real GDP B. output must equal consumption and investment. Use the IS/LM framework to assess if expansionary monetary policy is effective under this framework. Government purchases are fixed at $1,300 and taxes are fixed at $1. Which of the following equals the expenditure side of GDP? AE &= Y = C + I + G + NX\\ So we will solve, A: The consumer will reach at equilibrium when the slope of a budget line is equal to the slope of an, A: Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with, A: Planning: It refers to the process under which the firms make a blueprint of all the things that, A: Comparative advantage refers to the ability to produce goods and services at a lower opportunity, A: Given The consumer has an income of $18. It is a type of price control. D. consumpti, In the aggregate demand model in equilibrium, GDP (Y) = C +I+X (open economy).

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