4.3 and 4.4 solution needed urgently Exercise 4Consider the closed economy loanable funds model with :K = 100, L=100, F(K,L)= K05L05, G=40, T=30, c=0.5, 1=45-1000r4.1 Write down the main equation (supply-demand) that defines the equilibrium in thismodel. Explain and write down the equations for all the variables in this main equation.What is the endogenous variable?4.2 Solve the model computing the equilibrium investment and interest rate, and represent theequilibrium graphically.4.3 Is the government balance in deficit or surplus? And what is the amount of thisdeficit/surplus? Which tools has the government to get a balanced budget (G-T-0), i.e., howmany variables can it change?4.4 For each of the government's possible fiscal policy strategies to achieve budget balance(thus for each variable it may decide to change), calculate the variation in aggregate savings,and the new equilibrium interest rate and investment. Represent each equilibrium's changegraphically. Interpret your results.What do you think is the most effective strategy and why?Why even if the balance of the government is changing by the same amount, the two policieshave a different effect on equilibrium investment and interest rate?What are the limits in the real world for the application of these policies?

Given , Government Expenditure = 40 Tax Revenue = 30 Budget Deficit /Surplus is referred as the…

Answered: Exercise 4 Consider the closed economy…

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Consider the following Model (notation is standard):C=c(y-τ) I=i(r) y = C+I+G Md/P = L(y, r) Md= Ms=My = f(n) n = h(W/P) f´(n) = W/P Calculate the effects of a change in τ on C, I, r, y and P.
Write down the two decision variables of a household or the two goods (including both market and non market goods) in one period RBC model.
Give a description of the Fama-French three factor model, and the equation of the model.
Consider the binary variable version of the fixed effects model with an additional regressor, D1; that is, let Yit = β0 + β1Xit + γ1D1i + γ2D2i +...+ γnDni + ui.a) Suppose that n = 3. Show that the binary regressors and the “constant” regressor areperfectly multicollinear; that is, express one of the variables D1i , D2i, D3i, and X0it as aperfect linear function of the others, where X0it = 1 for all i,t.b) Show the result in (a) for general n.c) What will happen if you try to estimate the coefficients of the regression by OLS?
the following mundell-fleming model of a small, open economy will be used in all numerical exercises. it assumes a short-run framework in which prices are constant and output is demand-determined. c=150+0.8(y-t) i=500-30r nx=400-150e m/p=50+y-60r r=5 g=300 t=100 m=3000 p=3 the above values of exogenous variables will be referred to as their original values in the questions below. for this question, assume that the exchange rate is floating. derive the equilibrium equations for is* and lm*, sketch a graph of the two equations and solve for the equilibrium values of y, e and nx.
the following mundell-fleming model of a small, open economy will be used in all numerical exercises. it assumes a short-run framework in which prices are constant and output is demand-determined. c=150+0.8(y-t) i=500-30r nx=400-150e m/p=50+y-60r r=5 g=300 t=100 m=3000 p=3 the above values of exogenous variables will be referred to as their original values in the questions below. for this question, assume that the exchange rate is floating. derive the equilibrium equations for is* and lm*, sketch a graph of the two equations and solve for the equilibrium values of y, e and nx. b)Suppose the Treasury attempts to stimulate the economy by decreasing taxes T from 100 to 70. Calculate the new values of Y, e and NX. With the help of the graph you sketched in (a), explain the mechanism by which a new equilibrium is reached. answer part b
the following mundell-fleming model of a small, open economy will be used in all numerical exercises. it assumes a short-run framework in which prices are constant and output is demand-determined. c=150+0.8(y-t) i=500-30r nx=400-150e m/p=50+y-60r r=5 g=300 t=100 m=3000 p=3 the above values of exogenous variables will be referred to as their original values in the questions below. for this question, assume that the exchange rate is floating. Suppose the Treasury attempts to stimulate the economy by decreasing taxes T from 100 to 70. Calculate the new values of Y, e and NX. With the help of the graph you sketched in (a), explain the mechanism by which a new equilibrium is reached.
If the interest rate in the loanable funds market is currently below the equilibrium level, then the quantity of funds demanded is ____ the quantity of funds supplied, and we can expect the interest rate to _______ over time. Group of answer choices less than : decrease greater than : decrease less than : increase greater than : increase
Suppose you regress the annual percentage stock price returns on Russell 2000 small cap index for on a the percentage annual returns for a market index. Use the following output from this linear regression to answer questions a. - f. a. What is the formula for the Russell 2000's characteristic line? b. You forecast a market return of 6% next year. According to the market model, what is next year's expected return for the Russell 2000 index? c. What is the correlation between the return on the Russell 2000 and the return on the market Index? d. How much of the variation in the Russell 2000's returns are explained by the model? e. Based on these regression results, the Russell 2000 index would be considered what kind of an investment, defensive, aggressive, or market neutral? f. Does this regression have much explanatory power? Why or why not?
The Social Security Administration uses a linear growth model to estimate the lif expectancy in the United States. The model uses the explicit formula LN = 66.17 + 0.96N where LN is is the life expectancy of a person born in the year 1995 + N (i.e. N=0 corresponds to 1995 as the year of birth, N=1 corresponds to 1996 as the year of birth, and so on.) (a) Assuming the model continues to work indefinitely (which it won't - thanks COVID), the life expectancy of a person born in 2012 is Answer
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Explain when fixed effects, random effects or pooled OLS models are usually used.

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