2. The circular-flow model 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 the 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 Based on this model, households earn income when firms purchase factors in factor markets. Suppose Simone earns $600 per week working as a pilot for Wingies. She uses $8 to take a spin class at Silver's Gym. Silver's Gym pays Rajiv $500 per week to work as a trainer. Rajiv uses $200 to purchase international flights from Wingies. Identify whether each of the following events in this scenario occurs in the factor market or the product market.

2. The circular-flow model 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 the 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 Based on this model, households earn income when firms purchase factors in factor markets. Suppose Simone earns $600 per week working as a pilot for Wingies. She uses $8 to take a spin class at Silver's Gym. Silver's Gym pays Rajiv $500 per week to work as a trainer. Rajiv uses $200 to purchase international flights from Wingies. Identify whether each of the following events in this scenario occurs in the factor market or the product market.

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Production And Growth

Section: Chapter Questions

Problem 5CQQ

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…
13. The circular-flow model 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 the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Based on this model, households earn income when_________ purchase______ in factor markets. Suppose Valerie earns $700 per week working as a programmer for PC Pros. She uses $10 to have breakfast at Dinah's Diner. Dinah's Diner pays Shen $400 per week to work as a short-order cook. Shen uses $125 to purchase software from PC Pros. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Valerie spends $10 to have breakfast. Shen spends $125 to purchase software from PC Pros. Valerie earns $700 per week working for PC Pros. Which of the elements of this…
please explain each question. 1. We assumeconstantMPC in our model. Is this assumption true in the real world? 2. What determines the proportion of bonds/money that the household keeps? 3. What effect an increase of government spending will have on the output equilibrium in the goods market? Explain using autonomous spending.
2. The circular-flow model 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 the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. Based on this model, households earn income when purchase in factor markets. Suppose Maria earns $775 per week working as a doctor for the Medical Clinic. She uses $8 to have breakfast at Dinah's Diner. Dinah's Diner pays Kevin $475 per week to work as a short-order cook. Kevin uses $250 to purchase medical services from the Medical Clinic. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Kevin spends $250 to purchase medical services from the Medical Clinic. Maria spends $8 to have breakfast. Kevin earns $475 per week working for Dinah's Diner.…
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%
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…
17. Given this diagram; what is the level of G (government purchases of goods and services)? 18. Given this diagram; what is the level of Ca (autonomous consumption)?
2. The circular-flow model 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 the inner set of arrows (shown in red) shows the corresponding flow of inputs and outputs. (diagram attached as an image) Based on this model, households earn income when( a. firms b. households ) purchase( a. factors b. goods and services) in factor markets. Suppose Becky earns $750 per week working as a corporate attorney for Rowan and Martin Associates. She uses $10 to order a mojito cocktail at Little Havana. Little Havana pays Alex $475 per week to wait tables. Alex uses $175 to purchase legal service from Rowan and Martin Associates. Identify whether each of the following events in this scenario occurs in the factor market or the product market. Event Factor Market Product Market Alex spends $175 to purchase legal service from Rowan and Martin Associates. Alex…
Study the scenario and complete the question(s) that follow(s):SilesiaYou are provided with the following information about an imaginary economy called Silesia. Use the information provided in the table to answer the questions below.Government expenditure 400 Exports 250 Autonomous imports 50 Autonomous consumption 150 Investment Expenditure 300 Full- mployment output 2040 Marginal propensity to consume 0.75 Marginal propensity to import 0.15 Tax rate 0.25Source: Bester, N. 2017.5.1 Derive and calculate the consumption function for the data provided. Show all formulas and calculations used. 5.2 Calculate autonomous spending. Show all formulas and calculations used.5.3 Calculate the multiplier. Show all formulas and calculations used. Round off your final answer to 1 decimal.
QUESTION TWOSuppose that the economy of Mwaliteta Republic has the following data for some economic variables. Assume that Mwaliteta Republic has a population of 500,000 people.Variable Amount in million ZMWExpenditure on Non-durable goods 98Non-residential fixed investment 79Central government expenditure 60Local government expenditure 82Expenditure on durable goods 82Expenditure on services 99Export expenditure 60Inventory Investment 5Depreciation 4Property income from abroad 12Indirect taxes 12Residential fixed investment 42Personal income tax…
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?
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