Answered: Consider a frugal closed economy…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a frugal closed economy without money market. Assume there is no government or exports/imports. The economy is described by the following set of equations.

C =1000+0.5⋅Y
I^D = 600

1. What is the marginal propensity to save of this economy?

a) 0.4

b) 0.5

c) 0.1

d) 0.3

e) 0.2

Currently, the economy is saving a half of the amount it consumes. The level of unplanned inventory change is [0, 600, 200, 1400 , 2000 ] and the economy is [equilllibrium or not at equillibrium,]

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

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