1. Given the followinginformation:C = 500 + 0.85 Yd, Ip = 400, G =500, X = 600, T = 100 + 0.2 Y, M%3D= 300. Insert the final answer ofthe following questions:1. Multiplier =2. Equilibrium Income =3. Saving at equilibrium4. Total leakages =5. If the Government expenditureincreases to 800, the change inequilibrium level of income =6. If income is 4000, theunplanned investment (lu) =

1. Given the following information: C = 500 + 0.85 Yd, Ip = 400, G = 500, X = 600, T= 100 + 0.2 Y, M = 300. Insert the final answer of the following questions: 1. Multiplier = 2. Equilibrium Income = 3. Saving at equilibrium =

1. Given the following information: C = 500 + 0.85 Yd, Ip = 400, G = 500, X = 600, T= 100 + 0.2 Y, M = 300. Insert the final answer of the following questions: 1. Multiplier = 2. Equilibrium Income = 3. Saving at equilibrium =

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.6P

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Assume an economy in which:(i) there are no exports and no imports,(ii) investors always want to spend $200 billion, or I = 200,(iii) government spends $500 billion and tax revenue is $200 billion,(iv) consumption is a linear function of disposable income, C=100+0.8YdAnswer the following questions:a. What is the marginal propensity to save (MPS)?b. What is the saving equation?c. What is the equilibrium level of national output/income (Y)?d. At the equilibrium income level (Y*, your answer to c) calculate private saving,and explain the relationship between private saving and planned investment?
Assume that the economy can be modeled as follows: AE = C + I + G C = 300 + .6Yd I = 400 G = 100 T = 200 y= 1700 consumption = 1200 4) What is the level of private saving in equilibrium? 5) What is the level of public saving in equilibrium? 6) What is the level of aggregate saving in equilibrium? 7) Imagine the government would like to increase equilibrium GDP to 2,000, what would it have to set the level of government spending to? 8) What is the size of the spending multiplier? 9) What is the size of the tax multiplier?
Assume that the economy is now governed by a government and begins trading with other economies. The economy is described by the following set of equations. ?=1000+0.5⋅?d ID = 600 G=700 T=400 EX=0.1⋅Y IM=100+0.1⋅Y YD = Y - T Calculate the equilibrium level of output Y* a) 2857 b) 4000 c) 6274 d) 4400 Whats the government expenditure multiplier? Whats the tax multiplier? Whats the ba;anced budget multiplier?
Suppose that the following equations describe the 4-sector economyConsumption function C= 60 + 0.8 Yd,Investment function I= 100-5i,% interest rate i=6 (use 6 to compute for the investment),Government Expenditure G= 76,Lump sum Tax Tx= 15,Transfer payments TR=60,Exports X=70Imports M=20+0.2Y 5.1. Calculate the equilibrium level of income. At this level of income, is the economy operating with a budget surplus or budget deficit?5.2. Calculate the investment, government, tax, transfer payments and foreign trade multiplier.5.3. Suppose that government increases its education and health services by 65, what is the new level of income?5.4. If exports increase by 10, what is the new level of income? Is the economy operating with a trade deficit or surplus at this level of income?
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If Multiplier is 1/1-MPC and MPS+MPC=1, MPC= Marginal propensity to consume and MPS= marginal propensity to save. Using this formula and MPC is 0.9 multiplier is __________ and if MPS =0.4 multiplier is ________________ a 10 and 10 b 1 and 2.5 c 10 and 2.5 d 1.111 and 1.666
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Assume that the economy can be modeled as follows: AE = C + I + G C = 300 + .6Yd I = 400 G = 100 T = 200 1) Solve for equilibrium income (Y*). 2) Graph the economy. (Upload the graph in the next question.) 3) What is the level of consumption in equilibrium? 4) What is the level of private saving in equilibrium? 5) What is the level of public saving in equilibrium? 6) What is the level of aggregate saving in equilibrium? 7) Imagine the government would like to increase equilibrium GDP to 2,000, what would it have to set the level of government spending to? 8) What is the size of the spending multiplier? 9) What is the size of the tax multiplier?