13 For a given level of national income, a decrease in private consumption or governmentand the flow ofpurchases cause the equilibrium interest rate toa. Decrease; investment to increase.O b. Increase; investment to decrease.O c.Increase; investment to increase.O d. Decrease; investment to decrease.e. Increase; national saving to decrease.

The Solow Model of economic growth or the neo classical model of growth This model is also known as…

Answered: For a given level of national income, a…

For a given level of national income, a decrease in private consumption or government and the flow of purchases cause the equilibrium interest rate to

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Savings,investment And The Financial System

Section: Chapter Questions

Problem 4PA

See similar textbooks

Related questions

Q: Consider an economy with 100 pieces of apple (A) and 150 pieces of banana (B) that must be completel...

A: One of the most importañt feature of a particular aspect is equivalent to that of the efficient allo...

Q: Circle the Nash equilibrium. Professor Give quiz No quiz You Go to class (0, 0) (2, 6) Skip class (-...

A: We know that Nash equilibrium is the intersection of the best response for each player. Let player 1...

Q: If a country (say the UK) has 900 units of labour available, can produce two goods (cars and PCs) an...

A: Opportunity cost is defined as the foregone benefit that would have been derived from an option not ...

Q: Fiat money has value because it... O a. Can be manufactured at will by the issuing government. O b. ...

A: In a wide sense, fiat money refers to any kind of money that has been declared legal currency by a g...

Q: If the owner of the drugstore hired a manager for $10 an hour to take his place, how much of a chang...

A: Answer -

Q: Cartels have a difficult time maintaining their output agreements because an individual firm has an ...

A: Oligopoly: It is a market where there will be only some sellers and a large number of buyers availab...

Q: The occurrence of financial crowding out implies that: Short-run fiscal expansion increases the siz...

A: Crowding out is an economic situation where an expansion in government spending crowd outs the inves...

Q: The profit maximizing output level for this firm is

A: Any firm maximizes profit where MR=MC

Q: Market for ABC company’s clothing ABC clothing company produces clothing that is sold online and in...

Q: (a) State on thing that would cause market supply to increase (cause the supply curve to shift to th...

Q: Question 36 Single Cholce PlayOut is an online booking app for using city-wide playgrounds for vario...

A: Answer-

Q: Who favors Milton Friedman’s theories currently and how are they applied?

A: Answer-

Q: Savings, Investment, and Deficits Suppose a country has a closed economy, and at first it has the fo...

A: Real GDP (Y) = 800 Consumption (C) = 560 Government Spending (G) =120 C =c0 + C1(Y-T) Given the for...

Q: competitive firm has the short run total cost function: TC = Q³ – 8Q² + 30Q + 5 a. Find and graph th...

A: Total Cost function for a competitive firm is gives as : TC = Q3 - 8Q2 + 30 Q + 5 Average Cost func...

Q: and Cheryl are competitors in a small town and each is trying to decide if it is wrtl advertise. If ...

A: Payoff matrix as follows. Jim Advertise Not Advertise Cheryl Advertise (10,000 10,...

Q: Statements. As one of the largest and most advanced countries in the world, the United States would ...

A: Despite accounting for less than 5% of the global population, Americans generate and earn more than ...

Q: The incidence of a tax: - refers to who writes the check to the government. - is a measure of the...

A: In Economics, incidence of tax explains which party ultimately bears the burden of tax. It expalins ...

Q: (1) Labor Demand Curves are a) more elastic in the short-run than in the long run b) less elastic in...

A: Firms need labor and capital as inputs to their manufacturing process for generating products and se...

Q: 8. Before NAFTA, the wages of workers in Mexico were lower than in the US. What can we guess about t...

A: The North American Free Trade Agreement (NAFTA) is a trilateral agreement between Canada, Mexico, an...

Q: Consider with the cost function producing a single good with the cost function {.. 5, If A = 0 C(A) ...

A: Fixed cost is the cost which doesn't change with the level of output. And sunk cost is the cost whic...

Q: The Solow model 15 Y, = AK; L-) Eq(1) Given the relationship described in equation (1), we can state...

A: In neo classical growth models such as Solow-Swan model long run economic growth is defined in the f...

Q: Consider whether the promises and threats made toward each other by duopolists and oligopolists are ...

A: Given that to imagine two firms play the game in sequence and each of them claim that if both it and...

Q: Is Good X an inferior or a normal good? How much Good X will be purchased?

A: As given Qx = 953 - 9Px - 3Py +9Pz + 2M Also Px = $4/unit Py = $1/unit Pz =$7/unit M = $772

Q: (c) Is U a homogeneous function? If so, what's its degree? If not, please explain.

A: Given Utility function: U(x,y)=Aaxr+byr1r .... (1) We have to check whether the functio...

Q: 1. The cost in dollars, of producing x golf balls is given by: C(x) = 0.35x + 64 000 The average cos...

A: Answer -

Q: What is the usual shape of a marginal revenue curve for a monopolist? Why? 2.When a monopolist iden...

A: A monopoly is a market structure in which only one firm sells output, this firm has all market power...

Q: Explain the effects of the following statements to the equilibrium of supply and demand. Use supply-...

A: The equilibrium in the market is determined by the market forces of supply and demand. The demand cu...

Q: The adjustment process for an economy experiencing an inflationary gap involves wages, unit costs an...

A: In the above diagram, an increase in the government purchase leads to a rise in the aggregate demand...

Q: b. Construct demand and supply schedules that correspond to the equations above, given that: P, = 0;...

A: First we will find the equilibrium price and quantity Equilibrium : Qd = Qs -9P + 2557 = P - 75 10P ...

Q: 2. You are given £10,000 as a graduation present and you want to buy a new car in the future. Theref...

A: An interest rate is the amount of interest due per period, as a proportion of the amount lent, depos...

Q: Derive and extensively discuss the equi-marginal principle. a. Two commodity case b. Three commodity...

A: Now suppose that there are two commodities that are x and y, the price of x is Px, and the price of ...

Q: A sudden increase in food and energy prices... O a. Makes inflation targeting harder because these a...

A: The difference between the present level of real GDP and the GDP that would exist if an economy were...

Q: 3. Your income in Year 1 is R50 000, in Year 2 it is R100 000, in Year 3 it is R120 000, in Year 4 i...

A: The permanent income hypothesis of Milton Friedman (1957) extends Fisher's analysis to a model with ...

Q: A. If public utilities are a natural monopoly, what would be the danger in deregulating them?

Q: a. Distinguish between legally required reserves and excess reserves. b. Why don’t banks hold a 100...

A: The correct answer is given in the second step.

Q: Assume that Sarah agrees to lend $100 to Sam for one year. Sam agrees to pay Sarah $117 at the end c...

A: As it is given that Sarah lends $100 for one year to Sam Sam after one year pays = $117 inflation o...

Q: How does it help to explain the downward slope of the aggregate demand cure?

A: Aggregate demand refers to a total value of finished goods and services demanded in an economy durin...

Q: According to the liquidity preference theory, if the money supply increases, then, ceteris paribus, ...

A: This theory says that the interest rate in the market is determined by the demand and supply of mone...

Q: Targeting inflation is better than monetary fine-tuning when time lags in the implementation of mone...

A: targeting inflation is the monetary tool used to maintain or achieve the inflation rate under prede...

Q: Suppose the domestic supply (QS) and demand (QD) for MP3 players in the United States are given by t...

A: We have given the domestic demand and supply of MP3 players in the US as follows QS=-25+10P .....

Q: 12. Prove, using Eq. (4-42), that the long-run supply curve of a competitive firm is more elastic th...

A: Introduction Long run supply curve is more elastic because we have enough time for doing adjustments...

Q: TRUE or FALSE. If the statement is correct, write TRUE on your answer sheet. If the statement is inc...

Q: There are only two brands of tennis balls Tom purchases: "Wilson" and "Penn." The more he purchases ...

A: Here, Tom purchases two types of balls that are "Wilson" and "Penn." Tom can maximize his utility by...

Q: Economists consider the effects of free trade on income distribution to be less important than the e...

A: False If there is a free trade, it would cause the more demand of the less priced imported items and...

Q: uppose that the market demand for a certain product is given by P=370−2QP=370−2Q, where QQ is total ...

Q: chere is excess demand for money at the prevailing interest rate, the likely response is until the q...

A: The quantity of money demanded decreases as the interest rate rises. The quantity of money demanded ...

Q: 5. Achieving lower pollution Suppose the government decides to raise the gasoline tax as a way to re...

A: The charges that are being levied by the government on certain goods and services and are the main s...

Q: a. Undebased money will be driven from circulation. O b. Debased money will be driven from circulati...

A: Gresham's regulation says that legitimately exaggerated money will generally drive lawfully underest...

Q: PLAYER 2 M A 4,12 6,7 3,7 3,7 7,2 6,3 2,11 4,5 3,4 4,6 1,8 9,9 5,14 7,5 4,6 12,7 PLAYER 1 В D (4a) F...

A: Weakly dominant strategy: irrespective of actions of other players, it gives payoffs at least as muc...

Q: d. Suppose that society decided to reduce consumption and increase investment. i. How would this cha...

A: PLEASE FIND THE ANSWER BELOW.

Question

For a given level of national income, a decrease in private consumption or government
and the flow of
purchases cause the equilibrium interest rate to
a. Decrease; investment to increase.
O b. Increase; investment to decrease.
O c.
Increase; investment to increase.
O d. Decrease; investment to decrease.
e. Increase; national saving to decrease.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Consider an economy described by the following equations: Y = C + I + G AND, Y = 20,000; G = 4,000; T = 4,000; C = 1000 + 0.80(Y − T); : I= 2,500 – 120r. national saving AND the equilibrium real interest rate equal: Select one: a. national saving 2200 AND the equilibrium real interest rate 2.5%. b. national saving 2500,AND the equilibrium real interest rate 2%. c. national saving 4000 AND the equilibrium real interest rate 1.5%. d. national saving 3200 AND the equilibrium real interest rate 2.5%.
Suppose that every additional 3 percentage points in the investment rate boosts GDP growth by 1 percentage point. Assume also that all investment must be financed with consumer saving. Note: Investment rate = Investment/GDP The economy is currently characterized by Consumption: $11 trillion Saving (= Investment): $3 trillion GDP: $14 trillion If the goal is to raise the growth rate by 2 percentage points, a. by how much must investment increase? billion b. by how much must consumption decline? billion
a. Show the national income identity equation for a closed economy. b. Use the expression in a to show the equality between national saving and investment. What is the representation of private saving and what is the representation of public saving?
Suppose a closed economy had public saving of -$1 trillion and private saving of $3 trillion. What are national saving and investment for this country? B $2 trillion, $2 trillion $2 trillion, $3 trillion C) $3 trillion, $3 trillion $4 trillion, $2 trillion
Given that the individual is a saver, show the impact of:i) An increase in interest rate on Current and future consumption levels when SE > IEii) A decrease in interest rate on Current and future consumption levels when SE < IE
Write out the equation for desired national savings. What changesto desired national saving and desired national consumption happen whengovernment spending increases, funded by an increase in taxes? Why doesconsumption change by less than G?
Problem Set 4: Saving and Investment Economists in Fantasialand, a closed economy, have collected the following information about the economy for a particular year: Y = 9000; C = 6000; T = 1500; G = 1700. The economists also estimate that the investment function is: I = 3300 - 100r, where r is the country’s real interest rate, expressed as a percentage (i.e. r = 1 means interest rate is one percent). Calculate private saving, public saving, national saving, investment, and the equilibrium real interest rate.