Assume the following model of the expenditure sector: S=C+I+G+Nx TR=100 C=420+(4/5)YD I=160 G=180 Nx=-40 YD=Y+TR-TA TA=(1/6)Y Assume you increase both government purchases (G) and taxes (TA) by the same lump sum of deltaG=deltaTA=+300. Would this be sufficent to reach the full employment level of output at Y*=2700? Why or why not?
Q: During the 2012 fiscal year, households in an economy spent 80 per cent of their disposable income…
A: Introduction We have given data of a economy of the fiscal year 2012. We have to calculate the…
Q: T = 20 + 0.2 × Y T R = 10 − 0.1 × Y where Y is national income. The basic consumption function is…
A:
Q: (i)Calculate the national income equilibrium. (ii)Based on your answer…
A: The aggregate expenditure is the summation of total expenditure in an economy during a particular…
Q: Consider a simple economy in which investment is constant and equal to $100 billion. There is no…
A: Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts for…
Q: (b) Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300…
A: GDP refers to the total value of finished goods and services that produced within the economic…
Q: Label the following statement as True', False', or 'Uncertain', and explain your answer fully: "For…
A: In an economy, a large share of credit-constrained households refers to the situation when people…
Q: Analyse the effect on equilibrium national income if the MPC falls from 0.95 to 0.4. Illustrate with…
A: National income is an income that is generated by summing the consumption, government expenditure,…
Q: Assume that the Malaysian Prime Minister proposes to implement an economic recovery plan valued at…
A: a) Recognition lag, administrative lag, and operational lag are the time lags involved in enacting…
Q: Explain the difference between induced consumption expenditure and autonomous consumption…
A: Expenditure incurred by the consumers for consumption irrespective of their income is termed as…
Q: Assuming you are the Minister of Finance and Economic Planning for Nigeria, in charge of Fiscal…
A: Given information MPS=0.20 Autonomous consumption=5000 Investment=7000 G=8000 T=2000 t=0.25…
Q: Suppose a closed economy has an aggregate consumption function given by C = 50 + 0.50Yd and…
A: Gross Domestic Product (GDP) is the value of all the goods and services produced domestically in a…
Q: Suppose the interest on the debt was $700 billion. If interest is paid domestically, 90% will be…
A: Given: The total debt of the country is given as $700 billion 100% interest is paid domestically…
Q: Consider an economy with the following features: Consumption, C = 130 + 0.5Yd Income tax, T =…
A:
Q: Consider an economy with the following features: Consumption, C = 130 + 0.5Yd Income tax, T= 20 +…
A: We have given Consumption function C=130+0.5YD .... (1) Income tax: T=20+0.2Y…
Q: We use the following terminology in this part: aggregate income Y and disposable income Ya (= Y –T),…
A:
Q: The Break-even point also becomes the national income equilibrium point when: Saving = zero.…
A: Actually in easy word we can say that the break even point denotes the amount of the actual revenue…
Q: Given that G= 20 1= 35 C = 0.9Ya + 70 T= 0.2Y + 25 Where, G, I, C, T and Ya are planned government…
A: Aggregate expenditure is the sum of consumption spending, investment spending and government…
Q: Calculate the net cumulative change in the aggregate expenditure if taxes were cut by $200 billion…
A: Marginal propensity to consume measures the proportion of extra income that is spent on consumption.…
Q: Consider an economy similar to that in the preceding question in which investment is also $200,…
A: GDP refers to the total value of all the final good and services that produced within the economy…
Q: We use the following terminology in this part: aggregate income Y and disposable income Ya (= Y –T),…
A: Given: The hypothetical economy where: To Find: Th expression for the investment-saving (IS) curve:
Q: Explain how the equilibrium Output is determined utilizing the Income Approach, Commonly called: The…
A: *The aggregate demand refers to the total expenditure. *The aggregate supply refers to the Income.
Q: Fill in the table below to answer the next five questions. Assume that l", G and NX are fixed.…
A: Gross Domestic Product (GDP) is the total value of all the goods and services produced inside the…
Q: Determine aggregate expenditures (AE) in this economy when real GDP (Y) is equal to $1,500 billion,…
A: The aggregate expenditure refers to the amount of the money spent on the consumption, investment,…
Q: Assume there are no taxes. The equation for the consumption function is given to be: C = 100 +…
A: It is known that al the money that is earned is either consumed or saved. In other words, Y=C+S…
Q: With following values, c = 0,7, t = 0,41 and m = 0,86 use the multiplier and calculate the potential…
A:
Q: Assume a consumption function that takes on the following algebraic form: C = 100 + 0.8 Y. Assume…
A: Assume a consumption function that takes on the following algebraic form: C = 100 + 0.8 Y. Assume…
Q: Assume the following model of the expenditure sector: S=C+I+G+Nx TR=100 C=420+(4/5)YD I=160 G=180…
A: In the expenditure model, Y = C + I + G + NX , since the values are given: Y= 420 + (4/5)[Y –(1/6)Y…
Q: From March 2020 to March 2021, the US enacted three fiscal packages to stimulate the economy and…
A: We can see that disposable personal income with economic impact payments and personal income without…
Q: Q1. Refer to the theories of consumption, give brief answers to the following questions. 1. What is…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Consider an economy with the following specifications. Consumption Expenditure (C) = 120 + 0.56Yd…
A: Consumption Function= 120+0.56Yd Tax Function= 40+0.25Y Transfer payment= 56 Investment function=…
Q: Apply the IS/MP framework to discuss the factors that might affect the short-run impact on real…
A: In the short run, a fall in the autonomous spending causes the Aggregate Demand to fall for the…
Q: Incorrect Question 5 Suppose that national income is unchanged, taxes decrease, consumption remains…
A: Interest rates would decrease and money supply would increase because allready allready taxes have…
Q: . Find the equilibrium level of national income in the basic Keynesian macroeconomic model: Y=C+I+G…
A: Equilibrium level of national income is when AS=AD that is aggregate supply equates aggregate…
Q: Which of the following is true of aggregate expenditure? It is the sum of all injections plus…
A: In economics, aggregate expenditure is the current value of all the finished goods and services in…
Q: One of the debates surrounding changes in government spending is its effect on the size of national…
A: The aggregate demand and aggregate supply determine the macroeconomic equilbrium in an economy.…
Q: Given the following information, S = -200 + 3Y…
A: S=-200+3Y I=100 Find: a) National Income equilibrium by using the Leakage-Injection b) The value of…
Q: We use the following terminology in this part: aggregate income Y and disposable income Ya (= Y –T),…
A: given: C(Yd) = 12+0.75(Y-T)I(r)=124-1×rG=120T=20%
Q: If an economy is in equilibrium when national income is $1000, and the level of autonomous…
A: The marginal propensity to consume is a metric that quantifies induced consumption, the concept that…
Q: Suppose a closed economy has an aggregate consumption function given by C = 300 + 0.75Yd and…
A: Given Information- Aggregate consumption function C = 300 + 0.75Yd Equilibrium level of income…
Q: Assume that government purchases decrease by $10 billion, with other factors held constant,…
A: The autonomous spending multiplier shows the change in national spending as a result of a change in…
Q: Absorption refers to A. the quantity of aggregate output that is absorbed into the domestic cconomy.…
A: 1. Absorption is the total demand for all final marketed goods and services (domestic and…
Q: Which of the following is not a valid expenditure function? UP UP, None of these can be expenditure…
A: An expenditure function gives the lowest level of expenditure to be incurred by a consumer to attain…
Q: Consider the following hypothetical data for the U.S. economy in 2020 (in trillions of dollars), and…
A: Solution: a) Gross Domestic Product: It refers to the monetary value of the goods and services…
Q: suppose you are given a consumption, investment and government expenditure functions as C= 700 +…
A: C= 700 + 0.6Y I= 360+ 0.3Y and G= 440
Assume the following model of the expenditure sector:
S=C+I+G+Nx
TR=100
C=420+(4/5)YD
I=160
G=180
Nx=-40
YD=Y+TR-TA
TA=(1/6)Y
Assume you increase both government purchases (G) and taxes (TA) by the same lump sum of deltaG=deltaTA=+300. Would this be sufficent to reach the full employment level of output at Y*=2700? Why or why not?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Evaluating the relationship between R&D expenditures and net income is an example of the diagnostic analytics of __________. Multiple Choice determining relations/patterns/linkages between variables through statistical analysis performing drill-down detailed analytics identifying anomalies/outliers performing descriptive analyticssuppose you are given a consumption, investment and government expenditure functions as C= 700 + 0.6Y , I= 360+ 0.3Y and G= 440 respectively in the initial year. additionally, suppose that last year's aggregate demand determines this year's production. if autonomous investment rises from 360 to 400 then what will be the national income in three years ?Assume the following model of the expenditure sector: S=C+I+G+Nx TR=100 C=420+(4/5)YD I=160 G=180 Nx=-40 YD=Y+TR-TA TA=(1/6)Y Assume we want to reach Y*=2,700 by changing government transfer payments (TR) instead. By how much should TR be changed?
- It appears that there was an economic drop during the 2019-2021 period as a result of the pandemic. Assume that we can view this as a negative shock to private investment, due to a combination of lockdowns and uncertainty about the world. In under 150 words, answer the following question: Was government consumption expenditure used as stabilisation policy following the slow-down during 2020 and 2021? (Note, you only need to discuss this in terms of our demand model of Income-Expenditure, IS-MPR, and Aggregate Demand.) Year Government consumption per capita ($) (rounded to a whole number) 2003 6672 2004 6820 2005 7016 2006 7394 2007 7515 2008 7757 2009 8040 2010 7892 2011 7931 2012 7969 2013 7955 2014 8041 2015 8154 2016 8124 2017 8096 2018 8238 2019 8371 2020 8658 2021 9207 2022 9962Consider an economy with the following features: Consumption, C = 130 + 0.5Yd Income tax, T = 20 + 0.2Y Investment, I = 200 – 600r Government expenditure, G = 112 Real money demand, Md/P = 50 + 0.5Y – 600r Nominal money supply, Ms = 600 Price level, P = 2 where Yd stands for disposable income, and r for the rate of interest. Derive the IS and LM equations. Calculate the equilibrium levels of income and rate of interest.Assume taxes are zero and an economy has a consumption function of C = 0.89 (Yd) + $299.19. How much consumption takes place if disposable income is equal to 4,848.76? Round your answer to two digits after the decimal.
- During the 2012 fiscal year, households in an economy spent 80 per cent of their disposable income on consumption as well as GH¢300 consumption expenditure which is independent of income. Total government expenditure which stood at GH¢800 was supposed to be financed from a proportional tax levy of 50 per cent of national income and a VAT of GH¢100. Total private investment spending was made up of GH¢400 whereas export was GH¢400 and anautonomous import of GH¢500. Also, marginal propensity to import was 0.15 Determine the equilibrium national income for this economy.During the 2012 fiscal year, households in an economy spent 80 per cent of their disposable income on consumption as well as GH¢300 consumption expenditure which is independent of income. Total government expenditure which stood at GH¢800 was supposed to be financed from a proportional tax levy of 50 per cent of national income and a VAT of GH¢100. Total private investment spending was made up of GH¢400 whereas export was GH¢400 and anautonomous import of GH¢500. Also, marginal propensity to import was 0.15.1. Determine the equilibrium national income for this economy.2. Determine the consumption and savings levels at equilibrium national income.3. Find the size of the (expenditure) multiplier.4. Determine the new equilibrium level of income if government expenditure increases by GH¢70.5. If full employment output is 2000, what macroeconomic problem does this economy face? 6. In what direction should government expenditure change in order to achieve full employment output? 7. Determine…Assume the following model of the expenditure sector: S=C+I+G+Nx TR=100 C=420+(4/5)YD I=160 G=180 Nx=-40 YD=Y+TR-TA TA=(1/6)Y If the government would like to increase the equilibrium level of output (Y) to the full employment level Y*=2,700, by how much should government purchases (G) be changed?
- Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. A) explain what would happen to the national income equilibrium if the invesment changes by rm100 millionConsider an economy similar to that in the preceding question in which investment is also $200, government purchases are also $500, net exports are also $30, and the price level is also fixed. But taxes now vary with income and, as a result, the consumption schedule looks like the following: GDP Taxes DI C $1,360 $320 $1,040 $810 1,480 360 1,120 870 1,600 400 1,200 930 1,720 440 1,280 990 1,840 480 1,360 1,050 Find the equilibrium graphically. What is the marginal propensity to consume? What is the tax rate? Use your diagram to show the effect of a decrease of $60 in government purchases. What is the multiplier? Compare this answer to your answer to Test Yourself Question 1. What do you conclude? GDP…Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. Explain what would happen to the national income equilibrium if the investment changes by RM100 million.