Consider a simple macro model with a constant price level and demand determined output. The equations of the model are c=90+0.36y I=155 G=290’T=125 and IM=0.06Y. A national income of 1100 results in desired aggregate expenditure of…
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Consider a simple macro model with a constant price level and demand determined output. The equations of the model are c=90+0.36y I=155 G=290’T=125 and IM=0.06Y. A
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- consider a simple macro model with a constant price level and demand-determined output. The equations of the model are: C=150+0.88Y, I=350, G=500, T=0, X=100, IM=0.06Y. The marginal propensity to spend on national income,z,is ________.Analyse with a graph the effects of an increase in government spending on the IS-LM curveUse an ISLM model to analyse the effects of an increase in government expenditures on the interest rate and GDP,(i) in the case where the IS curve is quite flat and the LM curve is quite step,
- In the Macro Model, an increase in the amount of Capital in an economy due to Investment spending Group of answer choices Shifts only the Aggregate Demand Curve Shifts only the Aggregate Supply Curve Shifts only the slope of the Aggregate Supply Curve Shifts both the Aggregate Demand Curve and Aggregate Supply CurveThe 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 0A simple Macro model. In a closed economy (no trade), the government does three things. It purchases goods and services (G), it collects tax revenue (T) and it makes transfers to household and businesses (TR). G = 50 T = 20 + 0.2 × Y T R = 10 − 0.1 × Y where Y is national income. The basic consumption function is given by C = 30 + 0.8 × YD where YD is disposable national income. The desired investment is an autonomous term I = 30 a) Write down the equation for the AE (aggregate expenditure) function for this economy. b) Compute the equilibrium level of national income in this economy. c) Compute the value of the simple multiplier.
- Macroeconomists generally believe that year-to-year fluctuations in real GDP around its trend are best thought of as temporary departures from long-run equilibirum measurement error the sign of a healthy dynamic economy variations in the economy's equilibrium rate of growthThe aggregate expenditure function in a simple macroeconomic model with a close economy and no government is the sum of a. Wished for consumption and wished for investment b. Saving as well as the intended investment c. Expenditure and disposable income d.Which one of the following statements is true? In the pre-Keynesian era, prices were assumed not to fully adjust. In the Keynesian model diagram, prices are fixed. GDP is a value of goods and services domestically produced in a country at a given point in time. Say's Law says that demand creates its own production. In the IS/LM model, the interest rate is a function of investment.
- The following is the macro model of the economy for next year. (i) Find theparametric solutions for the predicted GDP (Y ) and for the predicted netexport (X): (ii) Verify that the 3rd equation is satisÖed by your solutions. Y=C+G0+X C=a+b(Y-t0Y) X=k-mYAssume 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 SConsider a simple model, such as the one developed in this chapter. The table to the right shows the levels of desired consumption, desired investment, and desired aggregate expenditures for various levels of actual national income.
