Consider the following closed economy: C = 30 + 0.87 x YD. 1= 2400 G = 2000 TR = 30 T = 0,40 x Y If there is a 80 increase in autonomous government expenditures, what is the change in government savings (assuming no change in the price level)?
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- Consider following IS-LM model: C = 200 + 0.25 · YD I = 150 + 0. 25 · Y – 1, 000 · i G = 250 T = 200 D M = 2 · Y – 8, 000 · i M = 1,600 P e) Solve for the equilibrium values of C and I! f) Solve for the equilibrium values of Y, i, C and I, if the money suppl increases to 1,840! g) Solve for the equilibrium values of Y, i, C and I, if government spending increases to 400 (the money supply is 1,600)!Consider a closed economy in which: C=250+0.8 (Y-T)I=400−30 rT=150G=220Y=C+I+G where Y is GDP, C is consumption, I is investment, T is taxes, G is government purchases, and r is the interest rate. If the economy were at full employment (that is, at its natural rate), GDP would be 3,000. Assuming no change in fiscal policy, what change in the interest rate (Δr) would restore full employment? Δr=______ Assuming no change in monetary policy, what change in government purchases (ΔG) would restore full employment? ΔG=______Given the equations of an economy: C= 10 + 0.75 Yd where C stands for consumption and Yd stands for disposable income T=0.2 Y where T stands for Tax and Y for income G=230, where G stands for Government expenditure I=280-6i where I stands for Investment and i for interest L=0.4Y-4i, where L stands for the demand for real balances M=800, where M stands for nominal money supply P=2, where P stands for the price level Calculate the budget surplus and If government spending were to increase by 10, what would be the change in the rate of interest, the level of investment and the level of income?
- Suppose the economy of Macroland is described by the following:C = 200 + 0.8 DI (DI = disposable income)I = 300 + 0.2Y − 50r (Y = GDP)(r, the interest rate, is measured in percentage points. For example, a 9 percent interest rate is r = 9).For this economy, assume that the Federal Reserve uses its monetary policy to peg the interest rate atr = 5G = 750T = 0.25YX = 200M = 150 + 0.2YHint: DI = Y − T From Table 36-1, find the trade deficit or surplus. a. 75 surplus b. 475 surplus c. 475 deficit d. 75 deficittions gwep17t.09.024 O O Which of the following are leakages from the circular flow of income? a. Savings, taxes, and imports b. Investment, government purchases, and exports c. Investment, taxes and bonds d. Imports, wages and taxes Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.Consider the economy of Ghana. The consumption function is given by C = 400 + 0.8(Y - T). The investment function is I = 600 - 70r. Government purchases is 400. Assume a balanced budget. The money demand function is (M/P)d = Y - 180r. The money supply M is 3,000 and the price level P is 3. Find the equilibrium interest rate r and the equilibrium level of income Y. Suppose that government purchases are increased from 400 to What are the new equilibrium interest rate and level of income? Suppose instead that the money supply is increased from 3,000 to 3,500. What are the new equilibrium interest rate and level of income? With the initial values for monetary and fiscal policy, suppose that the price level rises from 3 to 5 What are the new equilibrium interest rate and level of income? Please solve 4
- In a small closed economy, its aggregate demand and output are given as the equations below, Y = C + I + G; national output or GDP. C = 100 + 0.5(Y-T); consumption, marginal propensity to consume MPC = 0.5. I = 150 – 10*r; investment is a negative function of real interest rate (r as %). (M/P)d = Y – 20*r; real money demand which is adjusted by price level (inflation). G = 200; as government spending. T = 200; as tax. M = 2,400; as money supply. P = 4; the price level. (1) With the equations above, try to derive the IS curve. Tip: recall IS curve represent the relation between national output (Y) and real interest rate (r) in goods market. To derive IS curve, you need to put all components of Y together and find its connection with r. (2) Use the same equations, now try to derive the LM curve. Tip: recall LM curve represent the relation between national output (Y) and real interest rate (r) in money market. So to derive LM curve, you need to consider money supply and demand.…Consumption function C=250+0.6(Y-T) Investment I=100-20r Money demand function (M/P)=Y-20r a. Government purchases and taxes are both 100. In the accompanying diagram, graph the IS curve for r ranging from 0 to 8 by dragging and dropping the end points to the correct locations. b. The money supply M is 2,875 and the price level P is 5. In the accompanying diagram, graph the LM curve for r ranging from 0 to 8 by dragging and dropping the end points to the correct locations. c. Find the equilibrium interest rate, r, and the equilibrium level of income Y.what is management's usual reasons for using LIFO in an inflationary economy?
- 1. Consider an economy where the potential output is equal to the equilibrium output (i.e., 7 =Y) and the country is running a budget deficit (i.e., G>T). Suppose that the households in this economy become very thrifty. a. Using the IS-LM model, illustrate (draw a graph) and explain what happens to r and Y due to increasing thriftiness. b. If the government wants to stabilize output Y at its potential Y and balance the budget at the same time, illustrate (Draw a graph ) and explain what combination of monetary and fiscal policies should be implemented.What happens is the IS-MP model if most people are sent $1400 like in the Biden Rescue Plan? (Notice the answer choices all avoid saying “output gap increases/decreases” because that is confusing in real life. If the output gap goes from -4 billion to -5 billion did the gap increase or decrease? The textbook’s proposed solution is to say “more positive” or “more negative.”) output gap more positive, interest rate rises output gap more positive, interest rate does not change output gap more negative, interest rate rises output gap more negative, interest rate does not changeThe following equations describe a Keynesian model of a closed economy: C = 500 - 0.5(Y - T) - 100r I = 350 - 100r L = 0.5Y - 200i πe = 0.05 G = T = 200 Y = 1850 M = 3560 a. Find the full-employment equilibrium values of the real interest rate, consumption, investment, and the price level. b. Suppose government purchases decline to 175, with no change in taxes. What happens to the real interest rate, output, consumption, and investment in the short run (in which the price level is fixed)? What happens in the long run to the real interest rate, consumption, investment, and the price level? c. Suppose instead that government purchases rise to 225, with no change in taxes, starting from the equilibrium in part (a). What happens to the real interest rate, output, consumption, and investment in the short run (in which the price level is fixed)? What happens in the long run to the real interest rate, consumption, investment, and…
