For an economy the following consumption function is given : C = 60+0.75 Y. %3D (a) If investment in a year is $35 crores, what will be the equilibrium level of income or output ? (b) If full-employment level of income (i.e., level of potential output) is $460 crores, what investment is required to be undertaken to ensure equilibrium at full employment ?
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- How would a dramatic increase in the value of the stock market shift the AD curve? What effect would the shift have on the equilibrium level of GDP and the price level?The saving function is given as:- S = -25 +0.25Y Calculate the equilibrium level of income in the economy if it is given that the planned investment is $200 million.For an economy the following functions have been given:C = 100 + 0.8YS = -100 + 0.2YI = 120 – 5rMs = 120Md = 0.2Y – 5rCalculate the following:5.1.1. IS equation 5.1.2. LM equation 5.1.3. Equilibrium level of income 5.1.4. Equilibrium level of interest rate. 5.1.5 Calculate National saving. 5.1.6 Calculate money demand 5.1.7 Find consumption
- ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is C = 60 + 0.75Y. Also suppose that income (Y) is $600. Determine the following values: Instructions: For parts a, b, d, and f, round your answers to 2 decimal places if necessary. For parts c and e, enter your answers as a whole number. a. MPC = b. MPS = c. Level of consumption = $ d. APC = e. Level of saving = $ f. APS =Consider an economy called Xanadu for which desired aggregate consumptiondepends on income, Y. and the real interest rate, r, according toCd =100+0.7Y - 200r.Xanadu's GDP is Y = 1000 and government spending on goods and services is G=180. Xanadu's desired future capital stock is given byK* = 140 - 100ucwhere luCdenotes the user-cost of capital. The price of capital is PK =2, thephysical depreciation rate is d =0.1 and the existing capital stock is K0= 50. Trapital stock between any period t and the following period t+1 evolves accordng toKt+1 = It+(1-d)Kt where It the level of investment. Assume throughout that net factor payments from abroad (NFP) is equal to zero.Suppose instead that Xanadu is a small open economy facing a world interest rate of 1%. It follows that Xanadu's current account position is equal toA) -16B) -51C) -6D) -839 - Which consumption is dependent on income?A) Marginal ConsumptionB) Nominal ConsumptionC) Real ConsumptionD) Autonomous ConsumptionE) Stimulated Consumption
- Below are the information of four sector economy. All values are in RM billon. The saving function [Fungsi tabungan] : S = -200 + 0.15 Yd Investment, [Pelaburan] : I = 500 Government spending [Perbelanjaan kerajaan] : G = 300 Tax [Cukai] : T =100 Export (X) : X=200 Import (M) : M=100 Based on the data above, calculate the: a. Find value of MPC. b. Derive the consumption function for the above economy c. Calculate the equilibrium level of national income using the AD-AS approach.Equation for consumption is C=40/(0.8Y) where Y= yearly income = $400. The marginal propensity to consume is _______?Suppose an economy produces only 2 products that will also be used for directconsumption, as per the article at the end of the exam: chicken wings and donuts. Inthe second quarter of 2021 (the base period), 180,000 pounds of chicken wings wereproduced, at a value of $3.50 per pound, while in the second quarter of 2022,production of chicken wings increased to 200,000 pounds, at a value of $3.75 perpound. In the second quarter of 2021 (the base period), 85,000 donuts were producedat a value of $0.85 per donut, while in the second quarter of 2022, donut productionincreased to 100,000 donuts, each at a value of $0.95 per donut. The population inthis economy is 1000 individuals in 2022, while the number of hours worked in 2022is 5000. Also, the quantities that were produced in 2021 represent the quantities thatwere purchased by the typical household, meaning that everything that was producedwas sold.d. Solve for the amount of labor productivity in the second quarter of 2022.e. Solve for the…
- (a) Explain the difference between induced consumption expenditure and autonomous consumption expenditure. Why is not all consumption expenditure induced expenditure? (b) How is it possible for households to have a negative savings rate and what has caused this negative household savings rate? Is this negative household savings rate sustainable in the long run?Question 1. When the interest rate increases, the price of consumption when old relative to the price of consumption when youngoptions: O. decreasesO. increases O. has an indeterminate change O. does not change16. Suppose that planned investment and planned government purchases do not depend on income:I = 15 and G = 17. Consumption, as you would expect, does depend on income via the consumption function C = 2 + 0.75Y – 0.75T. Net taxes are T = 12. Your friend thinks that the equilibrium will be where Y = 150 but he is wrong. What is the best description of this situation? a. the (Y, AE) point is above the 45 degree line, Y will adjust down b. the (Y, AE) point is above the 45 degree line, Y will adjust up c. the (Y, AE) point is below the 45 degree line, Y will adjust down d. the (Y, AE) point is below the 45 degree line, Y will adjust up 17. (continued) Help you friend by calculating the equilibrium income for the AE model in the previous question. Y = _____