Assume the following behavioral equations for a macroeconomy: C = 100 + 0.9Yd, I = 50, T = 100 and G = 40. Calculate the equilibrium level of output.
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Assume the following behavioral equations for a macroeconomy:
C = 100 + 0.9Yd, I = 50, T = 100 and G = 40. Calculate the equilibrium level of output.
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- suppose the economy is characterized by the following behavioral equations: C=160+0.6YD, I=150, G=150, T=100. Solve the following variables: a). Equilibrium GDP (Y) b). Disposable income (YD) c). Consumption spending (C)The demand and supply of pizza is defined by the following equations: Qd = D(P, Y ) = 1 + Y − 2P Qs = D(P, PM) = 2 P/PM where, Qd is quantity demand, P is the price of each pizza sold, Y is the average income of consumers, Qs is the quantity supplied, and Pm is the price of inputs used in the production of pizza. (a) List the endogenous and exogenous variables of this model (b) Find the equilibrium price Pe and quantity Qe of pizza as a function of the exogenous variables. (c) Use a simple demand and supply diagram to show what happens to the equilibrium price and quantity when there is an increase in one of the exogenous variables.The fundamental concept in behavioral economics is that due to psychological phenomena, individuals may behave in ways that were previously believed to be irrational according to classical economic theory. Choose T or F: a. True b. False
- Define behavioral economics and explain how it contrasts with neoclassical economics.Differentiate between an exogenous variable and an endogenous variable in an economic model? Why isn’t it useful to construct an economic model that contains only exogenous variables (and no endogenous variables)?Why do behavioral economists consider it helpful to base a theory of economic behavior on the actual mental processes that people use to make decisions? Why do neoclassical economists not care about whether a theory incorporates those actual mental processes?
- A manufacturer of a sugar substitute has launched a campaign against the consumption of sugar. This is an example of ________. indoctrination backward induction anchoring sniping There are two grocery stores in the new neighborhood that you have moved into. Because you did not know which store is better, you decided to go to the one that is relatively crowded. Your behavior is an example of ________. herding anchoring signaling sniping Which of the following questions can be answered using the concepts of macroeconomics? Why does the rate of economic growth fluctuate from year to year? What is the difference between demand and quantity demanded? What is the effect of an increase in price on the supply of a good? Why do some firms produce differentiated goods? How does the expenditures measure of GDP differ from the production measure? It doesn't. The final value is the same. It is lower, because only purchased items are counted. It is higher due to the higher cost of a…While the Lindahl model (equilibrium) can be analogous to the market for private goods, they have interesting differences. How do we interpret Q1 in the diagram? What about S?Identify and explain three differences between neoclassical economics economics and behavioral economics?
- Explain behavioral economic beliefRefer to the Example 16.2 - "Contagion" Across Stock Markets Around the World. The graph shows the plots of three major stock indices - the S&P 500 in the United States, the FTSE in the United Kingdom, and the DAX in Germany. The indices tend to move together, increasing and decreasing at about the same time. Why do stock markets tend to move together? (Give the two 'general equilibrium' reasons provided by the author)What is the difference between deterministic and random variations in the pattern of demands? Provide an example of a real problem in which predictable variation would be important and an example in which random variation would be important.
