Assume the following model of the economy Y =C+I+G C = 120 + 0.5 (Y-T) I= 100 -10r G = 50 T=40 Derive the equation for the IS curve, showing Y as a function of r alone. Solve for the value of Y when r=10%, r=15%, r=20%
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Assume the following model of the economy
Y =C+I+G
C = 120 + 0.5 (Y-T)
I= 100 -10r
G = 50
T=40
- Derive the equation for the IS curve, showing Y as a function of r alone.
- Solve for the value of Y when r=10%, r=15%, r=20%
Step by step
Solved in 2 steps with 1 images
- The equations defining a simple model of the economy are : c=0.75y+18 and I =22 where C,Y and I denote consumption,national income and hence draw an accurate graph of C+I plotted against Y on the interval 0Linear equations for the consumption and saving schedules take the general form C = a + bY and S = -a + (1 - b)Y, where C, S, and Y are consumption, saving, and national income, respectively. The constant a represents the vertical intercept, and b represents the slope of the consumption schedule.a. Use the following data to substitute numerical values for a and b in the consumption and saving equations. b. What is the economic meaning of b? Of (1 - b)? c. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1 - b) remain unchanged. Restate the saving and consumption equations for the new numerical values, and cite a factor that might have caused the change.Linear equations for the consumption, saving schedules take the general form C = a+ bY and S= -a + ( 1 - B) Y, where C, S , and Y are consumption, saving, and national income, respectively. The constant a represents the vertical intercept, and b represents the slope of the consumption schedule. A) use the following data to substitute numerical values for A and B in the consumption and savings equation  B) what is the economic meaning of B? Of (1-b)? C) suppose that the amount of saving that occurs of each level of national income falls by $20 but that the values of B and (1-b) remain unchanged. Restate the saving and consumption equations inserting the new numerical values, and cite a factor that might have caused the change.
- 10.14 Total economic output in three years. The n - vector xt denotes the economic output of a country in n different sectors, in yeart. An economist models the economic output using a linear dynamical system model xt+1 = Axt, where A is an n \times n matrix. Assuming her model is correct, find an expression for the total economic output in yeart + 3, in terms of xt and A. (The total economic output is the sum of the economic output in the n sectors.)The national income model for an economy is represented as follows (units are in Ksh.M) Y = C + I + G + X – M I = 320 + 0.20Y G = 980 C = 540 + 0.80Y M = 640 + 0.25Y X = 850 Y = National income; C = Consumption; I = Investment; G = government spending; X = Exports; and M = Imports. Determine the following.TRUE or FALSE: This model has three endogenous variablesAnswer 1Choose... TRUE or FALSE: The country’s marginal propensity to save is 20%.Answer 2Choose... Autonomous level of importsAnswer 3Choose... Equilibrium investment Answer 4Choose... Equilibrium national incomeAnswer 5Choose... Net Exports (NX) Answer 6Choose... TRUE or FALSE: The economy is a net importerWhat is the Euler equation for consumption, and what is its economicinterpretation?
- In a two-period model, an individual earns and consumes C1 in period 1 and only consumes C2 in period 2. Suppose the saving interest rate is 3.3% and the income in period 1 is $4,500. Assuming consumption smoothing, the consumption (C1 or C2) for period 1 and period 2 should be $ A . Compute A.In a two-period model, an individual earns and consumes C1 in period 1 and only consumes C2 in period 2. Suppose the saving interest rate is 3.3% and the income in period 1 is $4,500. Assuming consumption smoothing, the consumption (C1 or C2) for period 1 and period 2 should be $ A . Compute A.Assume the following model of the economy: Y = C + I + G C = 120 + 0.5(Y - T) I = 100 - 10r G = 50 T = 40 Md = Y - 20 r Ms = 600 P = 2 Derive the equation for the IS curve, showing Y as a function of r alone. Derive the equation for the LM curve, showing Y as a function of r alone. Solve for C, I and SIn an economy of three sectors, assumed that : C= 400 + 0.75YD T= 400 I=300 G=400 All the variables are in RM Million. a) Based on the above information complete the table below. National Income Consumer Savings Aggregate Expenditure 3000 8000 Please provide me with the full answers with the working of the calculation so that I could learn it better. Thanks in advance.
- Question : Fisher's two period model implies that as long as consumption in both periods is as a normal good, then an increase in income in period two: a- increases consumption in period 1 only. b-increases consumption in period 2 only. c. does not increas consumption in either period. d. increases consumption in both periods. e. increases consumption in period 1 and reduce consumption in period.For an IS/LM model of an economy with the following equations: C = 200 + 0.8Yd I = 220 – 25i G with bar on top = 240 stack T R with bar on top = 150 T = .2Y L = .1Y – 3i fraction numerator M with bar on top over denominator P with bar on top end fraction = 125 The equations for the IS and LM (to two decimal places) are Y= 2168.4 – 69.5i and Y = 3i + 125 Y= 2168.4 – 69.5i and Y = 30i + 1250 Y= 2168.4 + 69.5i and Y = 30i – 1250 Y= 780 – 25i and Y = 30i + 1250.Based on the data in the table and graph below, identify the equilibrium GDP: Price Level Real GDP/Output in $ billion Real GDP/Spending in $ billion 80 100 180 90 120 160 100 140 140 110 160 125 120 170 115 130 175 105 140 178 100 Real GDP ($ billion) is charted on the x-axis (range 80-200). Price Level is charted on the y-axis (range: 60-150). The AS curve begins at (80,100) and ends at (179, 140), ascending up left to right. This curve intersects with the AD curve at (140,100). The AD curve begins at point (100, 140) and ends at (180, 80), descending left to right.