How would I do b and c 1. Using the following information:C = 200 + 0.9Yd1= 250G = 100T= 100Ya = Y-T, is disposable income.(a) Calculate the equilibrium level of income of this three-sector economy.(b) Calculate the spending multiplier.(c) Calculate the level of consumption at equilibrium in the economy.(d) Graph this three-sector model. Label everything.Now, we will explore the effects of expansionary fiscal policy on this model.The case of ap increase in Government expenditures (Expansionary fiscal policy)(e) Suppose that the government decides to increase government spending by 100 (whiletaxes constant, i.e. T=100, and G=200). Calculate the corresponding equilibrium level o(f) Calculate the new level of consumption at equilibrium in the economy.(g) Using the graph you obtained in part (d), graph the three-sector model (With G=200 anLabel everything.

Given C=200+0.9Yd ........... (1) I=250 G=100 and T=100 Where C represents consumption…

1. Using the following information: C = 200 + 0.9Yd | = 250 G = 100 T= 100 Ya = Y-T, is disposable income. (a) Calculate the equilibrium level of income of this three-sector economy. (b) Calculate the spending multiplier. (c) Calculate the level of consumption at equilibrium in the economy.

1. Using the following information: C = 200 + 0.9Yd | = 250 G = 100 T= 100 Ya = Y-T, is disposable income. (a) Calculate the equilibrium level of income of this three-sector economy. (b) Calculate the spending multiplier. (c) Calculate the level of consumption at equilibrium in the economy.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

See similar textbooks

Related questions

Q: Question 2 The IS-curve with the multiplier Y=¹[a b(rt-F)] ______ the baseline IS-curve Ỹ = a −b(rt…

A: 2) IS curve shows the negative or inverse relationship between income or GDP and interest rate.

Q: 1. Suppose that the economy can be described by the following equations: C = 400 + (8/9)*DI I= 300…

A: Disclaimer: As per Bartleby's policy, I am providing you with the answers to the first three…

Q: 2. If autonomous expenditure remains constant, and there is a decrease in the proportion of…

A: Equilibrium income = Multiplier * Autonomous expenditure

Q: 1. Briefly define the following terms and explain the relationship between them: MPC .... .…

A: Note: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question…

Q: 1.3. Identify the mistake and explain why the graph of the aggregate expenditures line does not…

A: The Keynesian-cross output model expresses the aggregate expenditure curve as a positively sloped…

Q: 3. Suppose the MPC is 0.8. The government wants to decrease Total Spending by $600. How should it…

A: GIVEN MPC = 0.8 decrease in Total spending = $600 (ie. ΔAD) Change in G to achieve (ΔAD=$600)…

Q: Q.1 DISTINGUISH BETWEEN INCOME AND DISPOSABLE INCOME Q.2 HOW DO TAXES AFFECT THE LEVEL OF AGGREGATE…

A: A person who works for a living is known to earn an amount of money that is known as income. This…

Q: Problem 1. The following specifications are given for an economy: Consumption, C = 250 + 0.75…

Q: In a closed economy with no government, a $1 billion increase in initial spending leads to a $5…

A: Multiplier effect occurs when change in aggregate spending leads to larger percentage change in Real…

Q: 2. If autonomous expenditure remains constant, and there is a decrease in the proportion of…

A: Here, it is given that autonomous consumption expenditure is constant with a decrease in marginal…

Q: You are given the following information about a closed economy with no government: Consumption = 115…

A: 4.1 Autonomous spending is the level of expenditure at the $0 level; of income. This can be…

Q: 4. The country of Merryville has an unemployment rate that is greater than the natural rate of…

A: Multiplier shows the proportion of change in a variable due to change in related variables. The…

Q: 1. Suppose that the economy can be described by the following equations: C = 400 + (8/9)*DI I= 300…

A: Given information C= 400+(8/9)*DI I=300 G=800 T-1/2*Y X-M=0

Q: QUESTION 4 Suppose the real GDP in a fictional economy currently equals to 160 million USD, the…

A: According to the above mentioned question we have:- Equilibrium level of GDP = 160 million Potential…

Q: 1. Given the following information: C = 500 + 0.8 Yd, Ip = 300, G = 500, X = 500, T= 100 + 0.2 Y, M…

A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: 3. In a given economy potential GDP is at $4,000,000. If equilibrium/actual GDP is $3,200,000,…

A: potential output economy get when economy operates at full employment situation . Full employment…

Q: Question 3 a) You are given the following information. C = 200 + 0.85 Yd I= RM 815 billion G= RM500…

A: Note:- Since we can only answer one question at a time, we'll answer the first one. Please repost…

Q: Question Four Suppose that the government increases taxes and government expenditure by equal…

A: Meaning of Marginal Propensity to Consume (MPC): The term marginal propensity to consume refers to…

Q: 3. Given the following information, S=-200 +0.3Y 1100 a. Calculate the national income equilibrium…

A: Answer: Given, S=-200+0.3YI=100 (a). The equilibrium in the leakage-injection approach exists where…

Q: 2. Suppose the consumption function of country A is C-1000+ 0.8Y, ( is the disposable income).…

A: Equilibrium condition: Y= C+I+G

Q: 2. If autonomous expenditure remains constant, and there is a decrease in the proportion of…

A: Macroeconomics is a sub-part of economics that is used to understand, the policies and fiscal…

Q: 1. Assume an economy where spending for each sector is: Household: C = 800 + 0.95Qd Business: I =…

A: Hello, thank you for the question. Since there are many subparts in the question, only the first…

Q: Question: Use The Following Information To Work Problems 4 To 6. In An Economy With No Exports And…

Q: You are given the following information about a closed economy with no government: Consumption = 115…

A: Hi, thanks for the question. As per the guidelines we are allowed attempt first three subparts. If…

Q: Determine the value of the multiplier for this economy, and find the equilibrium value of Y.

A: a) Value of multiplier can be calculated using the marginal propensity to consume, which can be…

Q: QUESTION 35 1 Q: 1- mpc + mpc t (Ca +I+G+X„) %3D 1 AQ 1- mpc + mpc ·t (ACa + AI + AG + AXn) |= 100,…

A: We have given following information I = 100, G = 200, Ca = 100, Xn = -100 MPC = 4/5 = 0.8 and…

Q: 13. 14. If government spending increases by $15, what is the new equilibrium level of real GDP? What…

A: Aggregate expenditure refers to the current value of all the finished goods and services in the…

Q: GDP, Billions Consumption, Billions $100 $120 200 200 300 280 400 360 500 440 600 520 700 600 c. Now…

A: Given the proportional tax = 10% We are required to find the new consumption schedule, MPC, and…

Q: 5. If the multiplier is 5 and investment increases by $3 billion, equilibrium real GDP will increase…

A: Hi! thankyou for the question but as per the guidelines, we answer one question at one time. Kindly…

Q: 1. Assume an economy where spending for each sector is: Household: C = 800 + 0.95Qd Business: I =…

A: The following equation is given: Household consumption: C = 800 + 0.95Qd Business investment: I =…

Q: 1. Suppose an economy is represented by the following equations. Consumption function C = 100 +…

A: The equilibrium level of income arises when the actual output is equal to the planned aggregate…

Q: Question: Given the following model for an economy C = 100 + 0.8Yd G = 800 T = 500 %3D | = 200 a)…

A: As per the guidelines, we only answer first three sub-parts at a time. Please resubmit the other…

Q: 2. Given the following information: C- 400 + 0.8 Yd, Ip = 200, G = 400, X = 400, T = 50+ 0.2 Y, M =…

A: Since you posted a question with multiple sub-parts, we will solve the first three sub-parts for…

Q: marginal propensity to save

A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: C= 350+ 0.3 Y I^= 800 G^= 750 X^=610 Z= 550+0.4Y T= 0.15Y Yf= 2500…

A: Multiplier = 1 / [1 - MPC + MPC*t + MPM]

Q: 200, and 200, and +.85 Ya All Figures in Billions of Dollars) Fill in Cells & Find Equilibrium Y=AE…

A: The measure that depicts the final value of goods and services produced in an economy within a…

Q: a) The accompanying table shows gross domestic product (GDP), disposable income (YD), consumer…

A: a) GDP YD C I planned AEplanned Iunplanned (billions…

Q: 1. Suppose that the economy can be described by the following equations: C = 400 + (8/9)*DI I= 300…

A: Initially, the economy was described in the following set of equation:…

Q: 3. If the current equilibrium GDP value is $925,000 and investment spending decreases by $25,000…

A: Here we calculate the new equilibrium GDP by calculating the multiplier , so the calculation of the…

Q: QUESTION5 Given the following data, solve for equilibrium national income Y: • C = $200 + 0.9375Y •…

A: In the equilibrium Y = C + I +G Also multiplier shows the how much autonomous spending change due to…

Q: 3. For a closed economy, the following data is given: 50 + 0.8Y, Consumption C %3D Investment I 70…

Q: Q.2.1 Calculate the level of autonomous spending in this economy. Q.2.2 Calculate the size of the…

A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…

Q: Assume a closed economy in which disposable income starts at 1,000 and increases by 500; consumption…

A: GDP is the value of final goods and services produced in the economy within a given period of time.

Q: • Tax rate = 12.5% %3D • Government expenditure = 100 Y 1. The new aggregate expenditure function is…

A: Given Information Tax Rate = 12.5%Government Expenditure = 100

Q: a. The following information is a three sector economy of a Consumption function (C) = 310 +…

A: Consumption: It refers to the consumption of goods and services in an economy. More consumption will…

Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

How would I do b and c

1. Using the following information:
C = 200 + 0.9Yd
1= 250
G = 100
T= 100
Ya = Y-T, is disposable income.
(a) Calculate the equilibrium level of income of this three-sector economy.
(b) Calculate the spending multiplier.
(c) Calculate the level of consumption at equilibrium in the economy.
(d) Graph this three-sector model. Label everything.
Now, we will explore the effects of expansionary fiscal policy on this model.
The case of ap increase in Government expenditures (Expansionary fiscal policy)
(e) Suppose that the government decides to increase government spending by 100 (while
taxes constant, i.e. T=100, and G=200). Calculate the corresponding equilibrium level o
(f) Calculate the new level of consumption at equilibrium in the economy.
(g) Using the graph you obtained in part (d), graph the three-sector model (With G=200 an
Label everything.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Topic: Fiscal Policy 1. A government collects $0.35 on every new dollar of income. Of the remaining $0.65 of disposable income, 20% is spent on imports, and 10% of the disposable income is saved. a. What is the marginal propensity to withdraw?b. How much of each new dollar of income is spent on domestic consumption?c. What is the spending multiplier in this economy?
3@ An economy has neither imports nor income taxes. The MPC is 0.75 and the real GDP is $120 billion. The government increases expenditures by $4 billion. The multiplier is _____ and the change in real GDP from the increase in government expenditures is _____ billion.
QUESTION 2 a. The following information is a three sector economy of a Consumption function (C) = 310 + 0.6Yd Investment multiplier (I) = 200 Government expenditure (G) = 170 Tax (T) = 180 i. Find value of autonomous consumption ii. Find marginal propensity to consume (MPC) and marginal propensity to save (MPS) iii) Using appropriate method, calculate national income equilibrium and show it in diagram.
Trace out the effect of increase in government expenditure on equilibrium output and the interest rate when government finance its expenditure through (a) open market operation, (b) increase in tax rate.
1. Suppose the households in a hypothetical economy has the following consumption function C= a + cYd. Where is the disposable income. The government in this economy imposes a tax rate of to households’ income (ex. A means that 10% of households’ income goes to tax payments). a. What is the equation that describes the disposable income of households? b. What is the Planned Expenditure Equation? Assume that government expenditure is exogenous and Investment function is given by the equation I = I-br Where is the interest rate. c. Derive the equilibrium output in the goods market and show that the multiplier in this model is 1/1c(1-t). d. How does and the tax rate affects this multiplier (e.g., what happens to multiplier if c increases cet.par. , or if tax rate increases, cet.par)?
Macroeconomics Question No.2 Suppose the consumption function is given by C = 100 + 0.8YD and that I = 50, while G=200, TR=62.5 and t=0.25. What is the equilibrium level of income? What is the level of saving in equilibrium? If investment were to rise to 150, what would be the effect be on equilibrium income. What is the value of multiplier in part a. and c. Draw a diagram indicating the equilibrium in part a. and c.
Suppose that the following equations describe the economy of the country of the Philippines.C= 500 + 0.8 (Y – T), I= 200, G= 300, NX= 50, T= 200, Yf= 5000; where C=consumption level, I=investment, G=government expenditures, NX=net exports, T=taxes and Yf=full employment output/income.Use this information to find each of the following:4.1. Investment, government and tax multiplier.4.2. Equilibrium output/income.4.3. The output gap.4.4. By how much would government expenditures have to change to eliminate the output gap?
Assume that the consumption function for the above economy is C = 1000 + .75Yd fill in the empty cells. (All Figures are in Billions of Dollars) Output Taxes Disposable Income Consumption Spending Saving Investment Government Aggregate Expenditure 5000 1000 750 750 7000 1000 750 750 9000 1000 750 750
4 Equilibrium output can be found arithmetically at the level where GDP equals ____________. output planned consumption planned spending planned savings
Answer the given question with a proper explanation and step-by-step solution. We have the following information for an economy. All values are in billion dollars. Disposable Consumption Income Spending с Y Y-T Output Net (Income) Taxes Y T $200 300 400 500 600 700 800 900 1000 1100 1200 1300 1400 $100 100 100 100 100 100 100 100 100 100 100 100 100 $100 200 300 400 500 600 700 800 900 1000 1100 1200 1300 $75 150 225 300 375 450 525 600 675 750 825 900 975 Saving S=Yd-C $25 50 75 100 125 150 175 200 225 250 275 300 325 In this economy, equilibrium income/output is. (Enter your response as an integer.) Planned Government Investment I Purchases G $80 80 80 80 80 80 80 80 80 80 80 80 80 $120 120 120 120 120 120 120 120 120 120 120 120 120 Planned Aggregate Expenditure C+I+G $275 350 425 500 575 650 725 800 875 950 1025 1100 1175
Refer to Table 24.6. The value of the government spending multiplier A. is 10. B. is 5. C. is 0.9. D. cannot be determined from the available information.
Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium. Elements £ billions Consumption (total) 80 Investment 9 Government Expenditure 6 Imports 15 Exports 8 What is the current equilibrium level of income? What is the level of injections? What is the level of withdrawals? If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier? What is the value of the multiplier? Comment on the results in part (3) and (4).