1. The economy's income and expenditureThe following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and theinner set of arrows (shown in red) shows the corresponding flow of inputs and outputs.FirmsMarkets forGoods and ServicesMarkets forFactors of ProductionBased on this model, households earn income whenHouseholdspurchasein markets for factors of production.Suppose Megan earns $575 per week working as a flight attendant for Flyaway Airlines, She uses $9 to order a mojito cocktail at Little Havana. Little omework (Ch 10)Suppose Megan earns $575 per week working as a flight attendant for Flyaway Airlines. She uses $9 to order a mojito cocktail at Little Havana. LittleHavana pays Larry $275 per week to wait tables. Larry uses $150 to purchase air travel to Hawail from Flyaway Airlines.Identify whether each of the following events in this scenario occurs in the market for factors of production or the market for goods and services.Market for Goods andServicesOEventMegan earns $575 per week working for flyaway Airlines.Larry spends $150 to purchase air travel to Hawail from FlyawayAirlines.Megan spends $9 to order a mojito cocktail.Which of the elements of this scenario represent a flow from a household to a firm? This could be a flow of dollars, inputs, or outputs. Check all thatapply.The $275 per week Larry earns working for Little HavanaMegan's laborThe mojito Megan receivesMarket for Factors ofProduction:True or False: Gross domestic product (GDP) cannot be used to measure the economy's income.O TrueO False

Households earn income when "firms" purchase their "factors of production : land, labor, capital…

1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households h

1. The economy's income and expenditure The following diagram presents a circular-flow model of a simple economy. The outer set of arrows (shown in green) shows the flow of dollars, and inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Firms Markets for Goods and Services Markets for Factors of Production Households h

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 2DQ

See similar textbooks

Similar questions

DI=Y OUTPUT/INCOME CONSUMPTION(C) SAVINGS (S) MPC MPS APC APS 0 80 ______ ____ _____ _____ _____ 100 140 _______ _____ _____ _____ __ ____ 200 200 _______ _____ _____ _____ _____ 300 260 _______ _____ ______ ______ _____ 400 320 _______ ______ ______ ______ ______ a. Complete the following chart above b. Show graphically ( what is the equilibrium level of output)? c. Assume the following general forms of a…
i need this in word not handwritten Q7. Assume that in 2015, the following prevails in the Republic of Nurd: Y = $200 G = $0 C = $160 T = $0 S = $40 I (planned) = $30 Assume that households consume 80 percent of their in- come, they save 20 percent of their income, MPC = 0.8, and MPS = 0.2. That is, C = 0.8Yd and S = 0.2Yd. Is the economy of Nurd in equilibrium? What is Nurd’s equilibrium level of income? What is likely to happen in the coming months if the government takes no action? 2. If $200 is the “full-employment” level of Y, what fiscal policy might the government follow if its goal is full employment? 3. If the full-employment level of Y is $250, what fiscal policy might the government follow? 4. Suppose Y = $200, C = $160, S = $40, and I = $40. Is Nurd’s economy in equilibrium? 5. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxation and continues to spend $30 every period. If I remains constant, what…
3. An economy shows the following featuresConsumption, C = 50 + 0.9YdTax Revenue, T = 100Investment, I = 150 – 5iGovernment Expenditure, G = 100Money demand, L = 0.2Y – 10iMoney Supply, M = 100Exports, X = 20Imports, M = 10 + 0.1YN/BYd is the disposable incomeRequired,(a) Obtain the IS and LM equations of the economy(b) Find the equilibrium income and rate of interest(c) Find the balance of trade
1. What would happen to multiplier if investment were to be positively related to income? 2. is it possible for total saving to fall when people beome more thirfty? 3. What is meant by multiplier?Why shoul the value of multiplier rise when people spend more on consumption?
Please see attachment Answer neatly Show all your work. Based on the above diagram: 1. Calculate MPC? 2. If Private Investment increases by 100, calculate the new level of NI. 3. If full-employment NI is at 3000, by how much should Government spending change? 4. What is the new NI, If 1/2 of those government expenditures are financed through taxes?
Consider the following NIPA data for 1Q2021 (First Quarter 20210 $ billlion) Investment: Non Residential $2,948.3 Exports $2,305.3 PCE Goods $5,183.5 Investment: Residential $1,043.7 Government Expendiures Federal $1,557.0 PCE Services $9,857.7 Imports $3,152.3 Governemnt Expenditures : State and local Goernent Expenditures $2,395.9 Change in private inventories -$90.1 2a. Compute the weights of each of PCE, GPDI, NX and GOV) in GDP 2b. Consider the following rates of change (%) for each of the above items. % change PCE 10.70% GPDI -5.00% NX -6.80% GOV 6.30%
1. Suppose that the economy can be described by the following equations: C = 400 + (8/9)*DI I = 300G = 800T = (1/2)*Y (X – M) = 0. a. If national income (Y) increased by $1, by how much would consumption increase? What is the name of this concept?b. Find the equilibrium level of output.c. The budget for this fiscal year increases government spending by $50. i) Sketch the effect of the increase in government spending.ii) Calculate the new equilibrium level of income.iii) Calculate the change in income and compare to the increase in government spending. Comment.iv) Given your numerical answer in part (iii), calculate the change in national income when government spending increases by one dollar.v) Derive the actual value of the fiscal multiplier using an algebraic equation. Compare to part (iv).Now G assumes its original value of G = 800.d. Congress decreases the tax rate from (1/2) to (1/4) i) Sketch the effect of the decrease in the tax rate. ii) Calculate the new equilibrium level of…
2. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. Which one of the following statements is incorrect? 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.
part 4 5 6 neede d i need this in word not handwritten Q7. Assume that in 2015, the following prevails in the Republic of Nurd: Y = $200 G = $0 C = $160 T = $0 S = $40 I (planned) = $30 Assume that households consume 80 percent of their in- come, they save 20 percent of their income, MPC = 0.8, and MPS = 0.2. That is, C = 0.8Yd and S = 0.2Yd. Is the economy of Nurd in equilibrium? What is Nurd’s equilibrium level of income? What is likely to happen in the coming months if the government takes no action? 2. If $200 is the “full-employment” level of Y, what fiscal policy might the government follow if its goal is full employment? 3. If the full-employment level of Y is $250, what fiscal policy might the government follow? 4. Suppose Y = $200, C = $160, S = $40, and I = $40. Is Nurd’s economy in equilibrium? 5. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxation and continues to spend $30 every period. If I…
4. A country’s consumer spending is defined by the following equation:Consumer spending = 365 + 0.75 (Disposable Income)a. Draw a diagram to represent this equation. b. Assuming no government, what will the Marginal Propensity to Save (MPS) in this country.c. What will be Consumer spending if disposable income in this country is 1000? d. If suddenly this country’s wealth increases, how do you think the equation might change.Also show it in a diagram.
Suppose we are in an economy with rich households and poor households. Rich and poor households have different consumption functions, with Cpoor = 100 + 35(Y poor − Tpoor) Crich = 100 + 15(Y rich − Trich) where Y rich, Y poor are the incomes of rich and poor households and T rich, T poor are the taxes faced by rich and poor households. We also have I = 200,G = 100, T = T poor + T rich = 100. Closing out the model, Y = C + I + G = Cpoor + Crich + I + G a Suppose that Y poor = Y rich Y2 (in other words, the total income of poor households is equal to total income of rich households.) Supposing further that T rich = T poor = 50, calculate equilibrium output Y . b Now suppose that Trich = 40,Tpoor = 60. What is equilibrium output now? c How can the government increase output without changing the deficit (hint: think about the difference between output in b and output in c.) d Now assume that T rich = 40, T poor = 60, but instead of output being split equally between rich and poor…
Hi there . can you please assist on the folloiwng question below. Use the following information on economy X to answer the questions below.Consumption function: C = 250 + 0.8YInvestment spending: I = 150Government spending: G = 500Exports of goods and services: X = 200Imports of goods and services: Z = 150Proportional tax rate: t =25%Full employment level of income = 3575 Q1.1 Calculate the change in government spending required to reachfull employment level of income.